MORE than $20 million in Australian wool grower capital from the defunct Graziers Investment Company won’t be distributed until the GIC liquidator and Australian Wool Innovation agree over an unresolved stamp duty issue.
In October 2017, wool grower owners voted to liquidate Graziers Investment Company Ltd and distribute about $20.5 million in capital to shareholders after they were assured all outstanding legacy issues had been settled.
Graziers’ Investment Company Limited was previously known as Australian Wool Services Limited, the successor to the Australian Wool Research and Promotion Organisation, which once had The Woolmark Company Pty Ltd and Australian Wool Innovation Limited as subsidiaries. AWI was de-merged from AWS in 2002 and The Woolmark Company was sold to AWI in 2007. There were 36,594 wool grower shareholders in GIC, mostly in New South Wales, Western Australia and Victoria, who holding 2,093,586 issued shares.
However, GIC liquidator Ahmed Bise from accounting firm Grant Thornton said all the GIC legacy issues had been dealt with except one, a stamp duty issue relating to the sale of a former GIC property in Mumbai India, which is now the German Consulate.
“The primary matter that has held back the finalisation of the liquidations has been the duty issue pertaining to the sale of a real estate property in India.
“The claim is against a former GIC group company called Woolmark Services India Private Limited (WSIPL), distinct from Australian Wool Innovation, which previously owned that property.”
Mr Bise said in July 2007, GIC entered into an agreement to sell its shares in WSIPL to AWI and Woolmark Holdings Pty Ltd, but GIC retained the beneficial interest in that property.
Stamp duty assessments by the Collector of Tax in India, totalling potentially up to A$500,000, following the share transaction and sale of the India property to the Republic of Germany, have been disputed by GIC and the subject of ongoing legal proceedings, he said.
“The companies (AWI and GIC) remain bound to this issue as a consequence of the operation of a Deed of Indemnity that was entered into at the time of the sale of the shares.
“Genuine attempts have been made to have this matter resolved without success,” Mr Bise said.
“I have also been working closely with AWI, who has offered all available assistance to have this matter resolved.
The balance of GIC funds held by the liquidator at the end of October was $20,557,112.22, mostly held on term deposit.
Former GIC directors meet to advise liquidator
In June last year, then GIC chairman Barry Walker told Sheep Central that there was nothing owed to AWI in relation to the Indian asset arrangement.
“It was completed to the satisfaction of AWI and GIC,” he said then.
However, Mr Bise this month said he is in the process of negotiating a settlement with AWI on the issue.
Mr Walker last week said the GIC board believed when it moved to liquidate the company there was nothing owing to AWI and it had advice that no monies were owed.
“But we were told it would take time for the so-called collector in India to complete and he also had to deal with the Germans, relating to whether the Germans had paid their amount (of stamp duty) to the collector or not.
“We had been informed that arrangements for that money had been made and on that basis we believed we were right and our legal opinion given to us was right, to liquidate,” he said.
Mr Walker said the GIC board also put aside some money in escrow to cover any potential liabilities in regard to the Mumbai issue. The former GIC board members held a meeting recently and gave Mr Bise their approval to negotiate with AWI, if necessary.
AWI is confident a settlement can be reached
Mr Bise said it is difficult to provide an indication as to how long it will take to agree on terms with AWI, but he hoped to reach a settlement “as soon as practicable”.
“I have also been assured by AWI that they too are keen to agree such a settlement as soon as practicable and consequently I am confident that this will occur.”
Mr Bise said his hope is that he will have a settlement with AWI before Christmas, with the aim of “wrapping this up as quickly as I can, once I have that in place.”
“Once the issue with AWI is resolved and taxation clearance obtained from the Australian Taxation Office I will be in a position to finalise the liquidations,” he said.
Mr Bise said GIC members have approved professional fees of $50,000 and $7500 plus disbursements and GST for Graziers Investment Company and GIC Holdings respectively. He said the $20.5 million has been invested and continued to earn income, which he estimated would be in excess of the final liquidation costs. Mr Bise did not expect any extra costs to wind-up the India matter would be “materially more” than what had already been approved.
Australian Wool Growers Association chairman Robert McBride said the issue needed to be resolved as soon as possible, even if a small amount of GIC funds needed to be used.
“This needed to be resolved immediately – Colette Garnesy (AWI chair) please make a definitive answer.
“If there are any liabilities then it needs to be resolved; we do not need AWI to be paying out any monies, but we don’t want this $20 million to be frittered away and for all GIC shareholders to miss out on the benefits.”
A statement from AWI said it is committed to agreeing a settlement as soon as practicable and is confident that this will occur.
“The primary matter that has held back the finalisation of the liquidation of GIC, is the stamp duty issue pertaining to the sale of a property in India.
“It is difficult to provide an indication as to how long it will take to agree on terms; however, AWI is keen to agree on settlement as soon as practicable as we acknowledge there are GIC shareholder funds that will be disbursed on settlement,” AWI said.
I smell a rat. The longer this drags on, the administration and other outgoing costs will be eroding what rightfully belongs to wool growers.
It’s about time this was sorted out and put to bed for everyone’s sake.
Oh, how our industry is missing the eagle eye of the late Vanne Trompf.
This has dragged on for a very long time, when it was originally claimed that all outstanding costs were covered. How did every one get it so wrong?