Renouf Asset Management has wound up its treeless forestry trust and returned all the money to investors.
The trust was established several years ago to invest in mid-rotation forests that required no further expenditure on things like pruning and silviculture.
However, it never managed to acquire any forests, rather its assets were cash and some Opio units.
The idea of the trust was that it would hold the forests through to harvest, that way unitholders would receive income and the trust wouldn't require cash, or need to raise debt finance, to fund the necessary silviculture which is required in a forest's early years.
Renouf director Stephen Underwood says that despite many attempts the trust was unable to acquire forests at what it considered reasonable and fair value.
"The prices people were asking were too high and were unsupported by valuations," he says.
A problem within the forestry industry is that vendors have inflated values of what their forests are worth. Part of this notion of value relates to the log price spike of 1993, he says.
Vendors still remember this event and use it to determine what their forestry assets are worth.
Underwood says Renouf insisted vendors provide at their cost a valuation of the forest, however none were prepared to do this.
"It was a bit like a Mexican stand-off," he says.
From Renouf's viewpoint it couldn't keep spending unitholders money on valuations, and it indicated the vendors didn't have "bonafide selling expectations," he says.
The other problem was that "90 per cent of the forest assets that were offered to us were young and still required silviculture," he says.
Renouf decided to wind-up the trust last September and made the final distribution to unitholders last week.
Renouf Asset Management has wound up its treeless forestry trust and returned all the money to investors.