Posted on 05/13/2022
Midway Limited signed an agreement to sell its existing 17,000 hectare plantation estate in south-west Victoria. MEAG, a wholly owned subsidiary of Munich Re, has established a special purpose vehicle (SPV) for a client, and the SPV will acquire the existing 17,000 hectare plantation estate from Midway for A$ 154.1 million.
As part of the transaction, the SPV has also committed to invest an additional A$ 200 million for land purchases for the development of new hardwood plantations in southwest Victoria over the next five years on land to be sourced by Midway Limited and managed by Midway Plantations Pty Ltd. The transaction is subject to and conditional upon approval by the Foreign Investment Review Board (FIRB).
The sale of the Midway plantation estate, and Midway’s receipt of the transaction proceeds, will settle in scheduled tranches as Midway unwinds its existing timber supply arrangements with Manulife Investment Management. Subject to regulatory approvals, the first tranche is provisionally expected to settle in mid-2022 and the last in or around September 2024.
As part of the transaction, the SPV will engage Midway Plantations Pty Ltd to manage the combined assets under a long-term management agreement and supply Midway Limited with all hardwood log harvested from the combined estate under a long-term offtake agreement, each on arm’s length commercial terms.
The cash proceeds will aim to help Midway’s balance sheet and remove annual valuation changes in biological assets that have previously created volatility in the valuation of company held assets.