Great Southern Update 26 5 2009



A large number of Great Southern growers/investors have queried why or whether they have to continue paying their loan obligations when the Company is in receivership.

The obligations for loan repayments are included in the loan documents that were signed at the time the original investment was taken out. The loan is a legally binding agreement between the lender (sometimes Great Southern and other times Adelaide Bank) and you the grower/investor.

For those of you who originally borrowed direct from Great Southern the debt was sold by Great Southern to Bendigo Adelaide Bank some weeks ago. The sale of these book debts was an attempt by Great Southern to sell down assets and reduce bank borrowings the company had obligations for. Under the loan agreements, the same as with any commercial loan agreement, the company had the right to sell the book debts provided the same terms and conditions applied.

One point that seems to be confused by a number of investors is the belief that the debt should not have to be repaid now due to the company has been placed in receivership. The debt is no different to the mortgage on your house or your car loan. If you house or car value drops the debt is still owing to the lender and the agreement is legally enforceable. In the case of Great Southern the debts that were owned by the company would have been recoverable by the receiver if they had not been sold to the bank.

What happens from here on?

1. I am attempting to establish a dialogue with Bendigo Adelaide Bank to see what they may be able to do with regard to being more lenient with growers who are affected by the recent Great Southern events.
2. I am investigating the possibility of a syndicated buyout of the Management Agreements and land as a measure to protect the investors. The agreements and the land assets are closely linked and if we can negotiate this outcome the impact on all investors should be minimal.

In summary:

You are obliged to continue your debt payments. If you are experiencing difficulty as a consequence of the collapse of Great Southern you should seek some form of relief from the Bendigo Adelaide Bank. If you want assistance with an approach to the bank we will do whatever we can to assist you.

The outcome for growers is uncertain and all we can do at this time is investigate avenues that will improve your position.