Investors have been left with little choice but to consider taking legal action against Rewards Group after the planned restructuring of two of its managed investment schemes (MIS) collapsed.
Specialist forestry manager Black Tree executive chairman Tony Jack said the restructuring of the agribusiness schemes, Rewards Sandalwood and Teak Projects, has been unsuccessful due to lack of new agreements over leases, leaving 4000 investors out of pocket $145 million.
Jack said while it had been hoped a restructuring of the Sandalwood Project 2000 would be successful, due to the land being leased by a third party, a letter to investors yesterday confirmed it also had little prospect of recovery.
“It is with great regret that we write to inform you of our recommendation to wind up the Rewards Sandalwood 2000 Project in which you hold an interest,” the letter said.
Jack said after undertaking further investigations into the viability of the plantation, negotiations with the landowner stalled.
“We are now at a stalemate, with the landowner insisting that he is only interested in re-instating the lease at full rental for another 10 year (with personal guarantees from Black Tree directors). This is a position we are not prepared to take, either personally or on behalf of growers,” he said.
“A number of growers have raised with me the prospects of undertaking some form of class action as a result of the Rewards debacle and [we] would like to talk through options with as many growers as possible.”
Rewards Group collapsed in May 2010.
