The listed timber company has been suspended from trading on the Australian Securities Exchange since July and has been locked in a dire battle to secure the on-going support of its banks.
Yesterday, key lenders Commonwealth Bank of Australia and St George lost patience with the company, placing it in the hands of Mark Korda, Mark Mentha and Bryan Webster of insolvency firm KordaMentha.
Like many companies in the forestry sector, Willmott was slammed by changes to the way managed investment schemes were operated. The rules surrounding the schemes, which originally encouraged small investors to pump funds into agribusinesses sectors with up-front tax deductions, were changed by the Howard Government in February 2007.
This effectively signed the death warrant for many timber companies that had specifically set their businesses up to sell timber products (or rather, rights to future timber harvests) to the managed investment scheme promoters.
With sales falling, the global financial crisis further exacerbated the problems experienced by the forestry companies, which had to borrow large sums to properly maintain their plantations.
This toxic mixture has already claimed a number of other big forestry companies, including Great Southern Plantations and Timbercorp.
Mark Korda said in a statement that Willmott had attempted to restructure in the last few months with a plan to offload assets and refinance its debt, but its debt obligations meant this plan could not be executed in time.
Korda also slammed what he said was a "fundamental flaw" in Willmott's business model – its near total reliance on future MIS sales.
"It became clear that the MIS forestry had collapsed after the failure of Environinvest, Timbercorp, Great Southern, FEA Group and the Rewards Group."
"Willmott Forests experienced a decline in new MIS sales from $66.5 million in 2008-09 to $19.5 million in 2009-10."
"This severely hampered cashflow, particularly when the Willmott schemes did not require annual maintenance or rental payments from growers."
KordaMentha will now begin assessing Willmott's various plantation schemes with a view to seeing which can be sold off.
The company has more than 56,000 hectares of radiate pine, silky oak and she-oak plantations in NSW, Victoria, Queensland and the Northern Territory.
Potential buyers are expected to include Tasmanian timber giant Gunns.
