Elders Forestry Management Limited (EFML) has encouraged growers invested in its Indian Sandalwood projects to ignore approaches from listed investment company Hamilton Securities attempting to gain control over the 15 schemes.
"Growers should be aware that, at this time, Hamilton Securities has not put forward any offer or other proposal for you to consider in relation to your Indian Sandalwood trees," Elders said in a communication to growers.
Hamilton director Giles Craig last week told InvestorDaily that the current offer before shareholders to sell to overseas bidder Santanol, for $70 million with $21 million of that being returned to Elders, substantially undervalued the assets.
In response, Elders said Hamilton has not yet approached Elders in regard to a competing proposal and was advising growers to take no action in relation to Hamilton Securities' announcement at this time.
"The board of Hamilton emphasises that Hamilton's proposal is still under development and it's subject to a number of variables that are yet to be determined," Elders stated.
"Accordingly, the EFML directors are not in a position to make a formal recommendation to growers in relation to any proposal that Hamilton Securities may put forward in the future.
"However, based on the information available at this time, the EFML directors consider that the potential proposal that is described in Hamilton Securities' announcement is highly preliminary and uncertain, and the EFML directors continue to consider that the Santanol transaction is in the best interests of growers."
Elders said it appeared from the Hamilton proposal that growers would receive no income in the short term. "It is important to note that the Sandalwood assets are not expected to generate any revenue until at least 2017 when the first harvest is anticipated," the Hamilton proposal stated.
Elders also questioned the financial capacity of Hamilton Securities to back their proposal and meet ongoing rental and management costs.
"We also understand that such proposal would rely upon Elders supporting the sale because the relevant schemes would not continue and leases, both by EFML and all landlords (including Elders), would need to be assigned to Hamilton Securities," Elders stated.
Late on Friday, however, Hamilton announced it had reached an in-principle agreement with Sandalwood producer TFS and claimed there had been increasing grower opposition to the Santanol proposal.
Hamilton's Mr Craig described the proposed deal as an "attempt to offload a key asset at firesale prices".
"Despite what Elders might claim about having a fully-funded offer on the table, growers should be aware that Santanol requires Foreign Investment Board approval which makes its offer highly conditional," he said.
Hamilton Securities is continuing to develop an alternative proposal for growers and has reached an in-principle agreement with TFS Corporation to manage and harvest the Sandalwood plantations, he added.
