Phaunos Timber Fund Limited Meeting with DWS 13 September 2018 - - PowerPoint PPT Presentation

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Mar 05, 2023 40 likes •160 views

Phaunos Timber Fund Limited Meeting with DWS 13 September 2018 Background Phaunos Timber Fund Limited (the Company ) launched in December In August 2017, at a general meeting of the Company, shareholders 2006 to invest in a

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Phaunos Timber Fund Limited Meeting with DWS

13 September 2018

SLIDE 2

Background

Phaunos Timber Fund Limited (the Company) launched in December

2006 to invest in a diversified portfolio of timberland and timber-related

investments. The Investment Manager at launch was FourWinds Capital

Management (FWCM)

December 2013, the Company terminated the management agreement with FWCM

The Board engaged Stafford Capital Partners Limited (Stafford) to

provide a review of the Company’s assets and the results were published in June 2014

Following the review, Stafford were appointed as investment manager

and sought to turn around the Company's performance including the sale of the higher risk assets

In June 2017, at the Company’s AGM, a resolution that the Company

continue for a further five years was not approved by shareholders

In July 2017, Stafford announced its intention to step down as manager

with effect from February 2018

In August 2017, at a general meeting of the Company, shareholders

approved a revised investment objective and policy to implement a managed wind-down of the portfolio

Each of the Directors that were in place resigned following the general

meeting

The existing directors were all appointed in H2 2017 with the mandate

to dispose of the asset portfolio and return capital to shareholders

Since then the Company received a firm cash offer from Stafford at

US$0.49 per share as well as a possible all-stock offer from CatchMark at US$0.57 per share

Stafford’s offer was rejected and the Company is currently evaluating

CatchMark’s offer

In the meantime the Company is progressing with the disposal of its

asset portfolio and announced on 5 September 2018 that it had opened a virtual dataroom to bidders for the Matariki and Latam assets

10 0.3 0.5 0.7 0.9 1.1 % Discount(-) / Premium (+)

Price (US$)

Phaunos NAV per share vs share price

NAV Event Share Price Discount Stafford appointed Stafford tendered Stafford resignation FourWinds appointment terminated 1,2 1 Please note that the NAV does not take into account the Indicative Bids received for assets which are subject to a sales process under the Asset Realisation Process The graph shows the Going Concern NAV from 30 May 2008 to 31 December 2016. With effect from 31 December 2016 the NAV was prepared on a break-up basis to reflect the wind-down status of the Company 2

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Portfolio Overview

Matariki 74% of Portfolio Value (PV)

New Zealand

The Company holds a 23.01% interest
One of the largest and highest quality

forestry assets in New Zealand with approximately 120,000 plantable hectares

f FSC certified plantations
Radiata Pine is the dominant species grown
Mainly serves New Zealand, China, South

Korea, Japan and India

82% EBITDA CAGR since 2015, driven by

significant growth in export demand

LatAm Portfolio 18% of PV

Brazil / Uruguay

100% interest in Eucateca (Eucalyptus), Brazil

− 7,500 plantable hectares in Mato Grosso − Most standing timber ready for harvest

100% interest in Eucateca (Teak), Brazil

− 1,700 plantable hectares of teak plantation − All trees planted in 2009

100% interest in Mata Mineira, Brazil

− 9,650 plantable hectares of fast-growing, Eucalyptus forest in Minas Gerais

100% interest in Pradera Roja, Uruguay

− 3,000 plantable hectares of mostly Eucalyptus − Half cutting rights sold for next five years

Aurora Forestal 5% of PV

Uruguay

The Company holds a 23.57% interest
Integrated business comprising 11,000

plantable hectares of pine forestland and a sawmill with production capacity of approximately 225,000 m3 per annum

GreenWood Tree Farm Fund 4% of PV US - Fund Interest

The fund is in liquidation with three remaining

assets − an outstanding loan note receivable − a parcel of timberland in Portland, Oregon − a pending legal claim, substantially settled

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Asset Realisation Process

4 ▪ The Asset Realisation Process was formally launched in late 2017 covering the entire portfolio ▪ Matariki and the LatAm Portfolio reflecting 92% of the portfolio value are subject to an asset sale process managed by Pöyry Capital ▪ The Asset Realisation Range reflects bids received in late June 2018 and subsequently confirmed in late July and early August this year, all in US dollars ▪ All bidders have been provided with preliminary information including information memoranda, appraisal reports and other relevant forestry and financial information ▪ All bidders are highly credible and well-capitalised international investors in timber assets ▪ All bidders for Matariki are experienced in dealing with the New Zealand Overseas Investment Office and have a detailed understanding of what is required to effectively navigate the consent process ▪ The Asset Realisation Process is expected to be substantially complete by Q3 2019 ▪ Aurora Forestal (5% of Portfolio Value) and GreenWood Tree Farm Fund (4% of Portfolio Value) are subject to separate disposal/liquidation processes, respectively ▪ On 27 July 2018, the Company’s interest in NTP was realised at marginally above its reported NAV as at 31 December 2017

Asset Realisation Range of US$0.54 – US$0.60 per share

The Board of Phaunos is committed to returning all sales proceeds from the Asset Realisation Process as they are received, after allowing for cash reserves to wind-down the Company

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Asset Realisation Process (cont.)

5 Matariki (74% of Portfolio Value) ▪ Process letters for phase 2 sent to selected bidders and access provided to a virtual data room ▪ Site visits to commence soon ▪ Binding offers due in early November ▪ Timing subject to consent from New Zealand Overseas Investment Office and Rayonier claims (see later) ▪ Completion of Matariki disposal estimated between Q1 2019 and Q3 2019 LatAm Portfolio (18% of Portfolio Value) ▪ Selected bidders have been provided with access to a virtual data room ▪ Phase 2 to include site visits, inventory checks and meetings with local forest management and operators ▪ Completion of disposal expected between Q4 2018 to Q1 2019 Aurora Forestal (5% of Portfolio Value) ▪ The Company has exercised its right to initiate a voluntary exit pursuant to the shareholder agreement ▪ The Company is also in discussions with the majority shareholder to negotiate a disposal of its interest ▪ The negotiations are progressing well and various

ptions are being explored to effect an exit

GreenWood Tree Farm Fund (4% of Portfolio Value) ▪ The disposal of this asset is subject to a separate liquidation procedure ▪ GTFF is currently in the process of realising the remaining three assets in the portfolio ▪ Expressions of interest and/or non-binding bids have been received for all assets in the portfolio

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Stafford Offer – timeline to date1

5 June Possible all cash offer Stafford announced a possible all cash offer of US$0.49 for the entire issued and to be issued share capital of Phaunos 21 August 14 August Firm cash offer for Phaunos Stafford announced an all cash offer of US$0.49, valuing Phaunos’ entire issued and to be issued share capital at approximately US$244.2 million Publication of Offer Document Stafford publish their offer document containing the terms of the Offer and acceptance conditions 31 July Phaunos publish Rejection of Stafford’s Offer Board publish their Response Circular stating that they believe the Stafford

ffer undervalues Phaunos and recommend shareholders to take no action

First Closing Date 3 July 22 August Stafford announce Extension of Offer Valid acceptances of 14.21% received by first closing date. Second closing date set for 5 September, terms of the offer remain unchanged Second Closing Date 6 September Stafford announce Second Extension of Offer Valid acceptances of 14.24% received by second closing date. Third closing date set for 13 September, terms of the offer remain unchanged 5 September Further information, including all documents relating to the offer by Stafford can be found at http://www.phaunostimber.com/offer-from-stafford/ 1

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Stafford’s Offer

Reject Stafford’s Offer – Extract Maximum Value

The Board believe that Stafford’s Offer undervalues Phaunos and that there is significant upside from the Asset Realisation Process compared to Stafford’s Offer. Accordingly, the Board have recommended that shareholders should take no action in relation to Stafford’s Offer

Next steps

Stafford’s Offer Stafford have offered US$0.49 per share This values the Company below the updated asset realisation range of US$0.54-US$0.60 and therefore the Board strongly believes that Stafford’s Offer does not provide an attractive exit opportunity for Shareholders and that the Asset Realisation Process is the best strategy for maximising shareholder value over a reasonable timeframe

US$0.60 US$0.54 US$0.49 Stafford’s Offer Updated Asset Realisation Range

The Updated Asset Realisation Range, based on Indicative Bids received in US dollars, represents a 10% to 22% upside to Stafford’s Offer

13 September Next closing date 15 September Latest date for Stafford to revise their offer 29 September Latest date for the offer to be declared unconditional as to acceptances

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CatchMark announced that it was evaluating a potential offer to acquire Phaunos Timber Fund in a stock-for-stock

transaction

CatchMark's potential offer values Phaunos at US$0.57 per share to be paid in new shares of CatchMark common stock

CatchMark Possible Offer

6 September – CatchMark publish Possible Offer announcement

Who are CatchMark? CatchMark Timber Trust, is a self-administered and self-managed timberland REIT traded on the New York Stock

Exchange. Further information can be found at http://www.catchmark.com/

6 September – Phaunos publish response to announcement

The Board noted that the possible offer represents a significant premium of 16.3% to the offer by Stafford Capital

Partners of US$0.49 per share

The Board explained that it intends to engage with CatchMark to fully understand its proposal and will consider it in

due course

5pm 22 September CatchMark deadline to have either announced a firm intention to make an offer for the fund or that it does not intend to make an offer

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Rayonier own the remaining interest in Matariki
On 27 August the Board were made aware that Rayonier has issued proceedings in the Auckland High Court alleging a

breach by Phaunos of confidentiality, notice and consultation obligations in the shareholders agreement

The substance of Rayonier's complaint relates to the inclusion within the Company's circular, published on 14 August

2018 in response to Stafford's takeover offer, of a valuation report on Matariki, as was required by Rule 29 of the UK Takeover Code

Rayonier has asserted that it is entitled to acquire Phaunos' interest in Matariki for NZD225m (c.US$152m), reflecting a

discount to what Rayonier believes to be the fair market value of Phaunos' interest in Matariki

Phaunos believes that Rayonier's claims are without merit and that the Acquisition Notice is invalid
Phaunos intends to defend itself vigorously against the claims brought by Rayonier and take whatever further steps it

deems necessary in order to protect its interests

Consequently, Phaunos will continue to progress the Asset Realisation Process in accordance with its strategy

Rayonier Proceedings

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Summary

Price US$

0.60 0.59 0.58 0.57 0.56 0.55 0.54 0.53 0.52 0.51 0.50 0.49 0.48 Stafford Offer Asset Realisation Range CatchMark Possible Offer Investment Policy The managed wind-down will be effected with a view to the Company realising all of its investments in a manner that achieves a balance between maximising the value from the Company's investments and making timely returns of capital to Shareholders Stafford’s Offer The US$0.54-US$0.60 asset realisation range represents a 10% to 22% upside to Stafford’s offer The Board strongly believes that Stafford’s Offer does not provide an attractive exit opportunity for Shareholders and that the Asset Realisation Process is the best strategy for maximising shareholder value

ver a reasonable timeframe

CatchMark Possible Offer

The CatchMark offer represents a significant premium of 16.3 per cent.

to the offer by Stafford Capital Partners of US$0.49 per Phaunos share

The Board intends to engage with CatchMark to understand fully its

proposal and will consider it in due course

There can be no certainty that any firm offer for the Company will be

made nor as to the terms on which any firm offer might be made

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Questions and Feedback

Q&A

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Disclaimer

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION This presentation (including any oral briefing and any question-and-answer in connection with it) relates to the all-cash offer by Stafford Capital Partners Limited (via Mahogany Bidco Limited) ("Stafford") for the entire issued and to be issued share capital of Phaunos Timber Fund Limited ("PTFL"); and the possible all-stock offer by CatchMark Timber Trust, Inc ("CatchMark") (each an "Offer" and together, the "Offers"). By attending (whether in person, by telephone or webcast) this presentation or by reading the presentation slides you agree to the conditions set out below. You should conduct your own independent analysis of PTFL, Stafford, CatchMark and each Offer, including consulting your own independent advisers in

rder to make an independent determination of the suitability, merits and consequences of each Offer.

This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Responsibility The directors of PTFL accept responsibility for the information contained in this presentation and, to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this presentation is in accordance with the facts and does not omit anything likely to affect the import of such information. Publication of this presentation A copy of this presentation will be available subject to certain restrictions relating to persons resident in restricted jurisdictions on Phaunos website at http://www.phaunostimber.com/ during the course of the Offer. Forward-looking statements This presentation contains certain forward-looking statements, including statements regarding the Offers, Phaunos's plans, objectives and expected

performance. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and
assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such

forward looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities, the re- negotiation of contracts or licences, fluctuations in demand and pricing in the timber industry, fluctuations in exchange controls, changes in government policy and taxations, industrial disputes and war and terrorism. These forward-looking statements speak only as at the date of this presentation. Further information, including all documents related to the Offers, can be found at: http://www.phaunostimber.com/.