Managed investment scheme promoter Rewards Group collapses

 Australia’s agribusiness sector has been dealt another blow with managed investment scheme promoter Rewards Group and its subsidiary Rewards Projects placed in administration, putting $250 million of investor funds in doubt.

The Perth-based company, which manages 12,000 hectares of forestry and fruit plantations around Australia, including teak, mango and strawberry plantations, has been fighting to raise working capital to keep the company trading.

However, Rewards Group boar announced yesterday that it was left with no choice but to call in Martin Jones, Andrew Saker and Darren Weaver of insolvency firm Ferrier Hodgson.

“While there remains interest from third party capital providers to providing such capital, Rewards’ working capital position has reached a point such that prudence required the appointment of voluntary administrators,” the directors said in a statement released yesterday.

The collapse has had a ripple effect on listed fund manager Ark Fund Limited, Rewards Group was the largest shareholder in Ark and was also the tenant on all 32 plantation properties that Ark Fund owned.

On March 31, Ark told the Australian Stock Exchange that it was proposing to merge with Rewards Group and raise $55 million via a convertible note issue, to help pay off Rewards Group’s debt and provide the company with working capital.

The merger is now off and Ark, which has been suspended from trade since February 17, has become one of Rewards Groups major creditors, given Rewards owes Ark an unspecified amount in rent.

Ark’s directors said in a statement yesterday that the “uncertainty around Ark’s financial position” remains unchanged and requested its shares remain suspended from trade.

The first meeting of creditors will be held on May 26 in Perth.

The collapse of Rewards Group is just the latest in a string of agribusinesses collapses, including Great Southern Plantations.