Director launches new bid for pine extraction
A 2014 Rotorua Daily Post report said Pacific T&R had emerged after shareholders of another Mountfort development company, Pacific Pine Derivatives (PPD), met in 2011 to discuss PPD’s liquidation after an American investor deal fell through.
The report said investors voted not to liquidate but to carry on. Then followed the Pacific T&R venture, with Macquarie, Selene Holdings and Mountfort each owning around a third of the company, according to Mountford at the time. Today PPD Derivatives is ultimately 78 per cent owned by Mountfort and his former wife. He is the only director, according to Companies Office records.
Asked by the Herald what went wrong with his Pacific T&R venture, Mountfort said he left the company several months before it failed. He claims to have been forced out.
“When they removed me, we had 30 per cent but they [Macquarie] had control of the board. What went wrong was that the company was controlled and run by a bank — we did a bad investment deal.”
Mountfort claims that after he exited, the board was advised by consultants that the company would soon be insolvent. He said he was told his shareholding would be reduced to 10 per cent. He claims he had to accept this situation or a payout. He chose to quit as a shareholder.
Macquarie declined to comment. Peter Masfen has been approached for comment.
“I was the technical guy. I lost everything. It was a terrible thing to go through,” Mountfort said.
Liquidator BDO said prior to its appointment in 2016, the shareholders unsuccessfully tried to sell the business as a going concern. Its manufacturing plant and other assets were eventually sold to the Taupo site landlord.
To launch the new Kawerau venture, Mountfort and Foresta have bought back the plant from the landlord. Mountfort values it at $36m.
He told the Herald he had originally planned to ship it to Queensland where he had lived and worked since the failure of Pacific T&R. There he was involved with a company called Essential Queensland, which manufactures gum rosin and gum turpentine from pine trees. This company has been folded into Foresta, which shifted its headquarters from Australia to the Bay of Plenty last year to be closer to a better supply of pine.
So, what is Foresta and what is Mountfort planning now?
Herald inquiries show ASX-listed Foresta was until August last year known as Leaf Resources, a Queensland entity registered in 1999.
Mountfort, managing director of Foresta and one of three directors, said he was offered Leaf in a reverse takeover deal. Leaf had not achieved anything from its own work with wood, he said. He changed its board in 2022 and 2023 and was looking for two independent directors.
Foresta reported an A$8.2m ($8.9m) loss in FY2023.
“The purpose of Foresta is to do this project. When you develop a new process you’re going to make a loss. That loss in 2023 is part of it,” said Matata-born Mountfort.
Foresta has a market capitalisation of A$29.2m. It has 2,249,054,053 shares on issue and its shares are trading at A13c. The average volume traded has been 907,736 shares, according to the ASX.
Revenue in FY23 was A$0.41m and earnings per share A$0.002.
Mountfort said Foresta had invested $19m in the Kawerau proposal to date. This was raised through its ASX company and had been spent on the Taupō plant purchase, engineering, contractors to dismantle the plant at Taupō in preparation for a move to Kawerau, and maintenance.
“We’re now in the process of raising not quite $130m for construction starting in September.” Funding for the project would ideally be 50:50 debt and equity, he said.
“The debt part focuses on New Zealand. We have a lot of equipment involved, it’s a very bankable project and we are working with institutional banks. On the equity side, we already have significant investment coming from our Australian company and that can sustain it to a certain level and we’re working on significant project equity investment alongside that through different relationships I have in the US, UK and Australia.” Mountfort said he’s not approaching big converters from coal such as Fonterra and Genesis with his pellet offering because he doesn’t want to risk ceding control.
He acknowledges the funding challenge but is confident the Kawerau venture is starting on much more solid ground than his previous efforts to commercialise his patented processes.
This time round it has secured commitments and agreements from the sector.
This month, soon after announcing it had signed a 30-year lease with a 20-year right-of-renewal on a 9.6ha property in Kawerau with the Putauaki Trust, Foresta inked a 10-year wood supply agreement with forestry heavyweight PF Olsen.
The forestry services company will supply 150,000 tonnes of logs, stumps and wood slash to underpin early production of wood pellets.
PF Olsen executive Scott Downs told the Herald 150,000 tonnes was not a large amount of wood but it “was a foot in the door” should the Foresta venture succeed.
PF Olsen was not an investor, Downs said.
Foresta has also announced an agreement with South Island energy distribution company Tailored Energy & Resources to supply 65,000 tonnes of pellets annually to its industrial customers to replace coal.
Mountfort hoped the Kawerau venture would be profitable around a year after commissioning.
It would reach full production three years after opening, with estimated production of 52,000 tonnes of chemicals and 210,000 tonnes of pellets a year, he said.