Limited Partnership Forests Update

20th February 2019


Dear Investor,


LLP Forest Update


This bulletin is intended as a short update on progress to date in relation to the March 2018 financial statements, the sales process and meetings to be held.


The 2018 audited financial statements have been delayed due to the uncertainty in relation to a possible sale of Waverley Sawmills and a formal forest sales offer being presented to the LLP Forests.  Waverley Sawmill and the General Partners of each of the Arbor LLP Forests entered into a sales process with Cranleigh Partners (as project manager and sales agent) prior to the end of the last financial year, the results of which means any outcome is defined as a subsequent event in finalising the 2018 financial statements.


A further issue which has arisen from the audit process is that the forest valuation methodology used in valuing the Arbor LLP Forests is based on the presumption of harvesting at age 27, which may not be realistic due to availability of contractors and age class mixes.


The General Partners are working closely with the auditors to complete the (much-delayed) audit process for the 2018 financial statements of the LLPs.  They believe the final remaining issues have been addressed and the relevant work now only needs to be completed.   


As soon as the financial statements are received, the General Partner will compile and forward to all Limited Partners to enable (again much-delayed) the annual meeting to be held, after giving 10 business day notice. We are working with the auditor to try and ensure that annual meetings can be held in March.


There is still more work to do on aspects of a Waverley Sawmill sales transaction.  Currently, there are two bidders which have presented offers for the Sawmill.  Both have yet to present a completed Sales and Purchase Agreement.  Both bids are targeting a quick settlement.  The Directors of Waverley Sawmill are not in a position to put a timeline in place at this stage whilst both parties work through their respective issues.


The offers for the Sawmill as presented are lower than expected but after 12 months of a contestable process, these appear to be the best offers available.  Unfortunately there will be no equity returned to any Sawmill shareholder.


In the meantime the Sawmill has ceased cutting, however it continues to process product from lumber stocks held on site.  In turn pruned logs from both Bradwood and Greenoch forests, that were previously being sold to the Sawmill, are being sold at market price to other customers.


There has been a series of linked discussions with one bidder about a sale structure for purchase of the eight LLP Forests.  Once the sale documentation has been finalised it is expected that detailed materials will be provided to Limited Partners – and Special General Meetings for each of the eight LLPs will be convened in order to enable investors to consider whether to accept an offer for their forest.  Whilst negotiations over this part of the sales process are at an advanced stage, and are expected to be concluded in the next fortnight, there is still no assurance that the terms will be finalised to a point where they can be put to investors for you to decide.  It is expected that it will take a further period of 2-3 weeks in order to prepare the material for any Special General Meetings.


The decision process in relation to the Sawmill will be made by the Directors of Waverley Sawmills Limited.


The General Partners have requested the Forest Manager to commence the 2019 forest valuations and to detail a likely harvest timeline for all forests.  These valuations will be utilised by the Valuer to reach a methodology which will be acceptable by the auditor and used in the 2019 financial statements.  We hope this will reduce any delays in presenting 2019 financial statements and the associated annual meeting process.


The Directors of each of the General Partners acknowledge and share your frustration with the delays in concluding a sales process and presenting the financial statements.


Please contact if you have any general enquiries and we will endeavour to answer them as best we can.



Yours sincerely,


Peter Bould,  Peter Martin & Malcolm Johnson


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