Rewards Group Limited and Various Subsidiaries (Administrators Appointed)

1
Rewards Group Limited and Various Subsidiaries
(Administrators Appointed)

• First Meeting of Creditors
• 26 May 2010

2

• Chairmans Introduction

3
Chairmans introduction

• Administrators Martin Jones, Andrew Saker and
  Darren Weaver
• Appointed on 16 May 2010 over 8 companies
• Receivers and Managers appointed on 20 May 2010
  to Rewards Group Limited and Rewards Land Pty Ltd
  McGrath Nicol
• Separate meetings held together
• Martin Jones to act as Chairman

4
Housekeeping

• Please turn off all mobile phones during the
  meeting
• Media will be asked to leave
• Webcast
• Chairman will invite questions at appropriate
  time
• All questions to be directed to Chairman
• When asking a question, please clearly state your
  name and the name of the company you represent

5
Introduction of meetings

• First meetings of creditors
• Notice of meetings
• Purpose of meetings
• Separate meetings held together
• Admission of proxies
• Amount admitted voting purposes only
• Quorum
• Voting and resolutions

6
Independence, relationships and indemnities

• Declaration attached to Notice of Meeting
• No prior relationship with Company or related
  parties
• No conflict of interest
• Other relationships
• Banks financial institutions

7

• Voluntary Administration Process

8
Objectives of an Administration

• The objective of an Administration of a Companys
  affairs is to
• Maximize the chances of the Company, or as much
  as possible, continuing in existence.
• If not possible, result in a better return for
  Companys creditors and members that would
  otherwise result in the immediate winding up of
  the Company.

9
Voluntary Administration Process
Administrators
First meetingof creditors
Report tocreditors (to be issued 5 business
days prior to meeting)
Second meetingof creditors (25 business days
fromthe date of appointment on or before 21
June 2010)
What happens at the second meeting of creditors?
Administrationshould end
Deed ofCompanyArrangement
Liquidation
What cancreditorsdecide?
10

• Group Overview

11
Group Structure
Rewards Group Limited (Parent Company)
100 owned
100 owned
100 owned
100 owned
100 owned
Ord Packers Pty Ltd
Greentree Capital Pty Ltd
Rewards Projects Limited
Rewards Land Pty Ltd
Rewards Management Pty Ltd
100 owned
Berry Packers Pty Ltd
50 owned
Key Fixed and Floating Chargeholder(s)
Rural Labour Pty Ltd
NAB only
NAB and CBA
NAB (1st ranking) and Linetime Holdings Pty Ltd
(2nd ranking)
No Fixed and Floating Charges
12
Operational map
Victoria
13
Relationship Between Companies and MIS

• Assets of the MIS are separate from the rights
  and obligations of the companies

• Rewards Group Ltd
• Rewards Projects Ltd
• Company specific assets and liabilities
• Liabilities include secured NAB debt of 24m and
  other securitised loans of 49m (CBA and
  Investec)
• Rewards Projects Ltd acts as responsible entity
  on behalf of investors

• MIS
• 45 MIS projects
• Projects held by Rewards Projects Ltd for
  approximately 9,000 MIS investors
• Each MIS project is separate and distinct
• Projects must be independently viable and
  accountable

Investors Possible contingent claims currently
not determinable
14
Operation of MIS Projects

• Investors are different to ordinary creditors of
  the company.
• Investors are not creditors unless there is a
  claim for breach of duty by the Responsible
  Entity.
• Each Investor has an interest in a MIS, assets of
  which are quarantined from the companys assets
  and generally can only be made available to
  investors.
• Two issues for investors are
• Is the MIS project viable?
• Will the RE continue to honour its obligations?

15
Operation of MIS Projects
Rewards Land Pty Ltd (Land Owner)
MIS Investor
The ARK Fund Limited (Land Owner)
Owns trees/ fruit
Leases land
Managed Investment Scheme
Rewards Projects Ltd (Responsible Entity)
Manages Scheme
Provides services to the Responsible Entity to
manage the Scheme
Pays rent to Land Owner
Pays Responsible Entity fees and costs
Pays MIS Investor proceeds from sale of product
net of costs
Rewards Management Pty Ltd (Service Provider)
16
Assessment of MIS Projects Viability
MIS Viability Analysis
NOT VIABLE
VIABLE
Is RE able to meet obligations?
Other funding options
YES
NO
NO
YES
Will RE continue to meet obligations?
Replace RE
Wind-up project
NO
YES
Continue Scheme
17
Order of Priority for Repayment
MIS Schemes
Rewards Group Subsidiaries

• Secured Creditors to be paid from fixed charge
  assets

• Costs for maintaining the MIS

• Management Fees to be paid to the Responsible
  Entity

• Receivers remuneration

• Employees

• Investors

• Secured Creditors to be paid from floating
  charge assets

• Administrators remuneration

• Ordinary Unsecured Creditors

• Ordinary Shareholders

18

• Administrators Approach

19
Ferrier Hodgson Approach

• We have established dedicated teams to address
  each key area

Operations
Administration
Investigation

• MIS viability analysis and compliance
• Reporting, communication and meetings
• Legal review
• Interaction with receivers and managers
• Monitoring of outcomes from receivership
• Creditor shareholder liaison

• Report to creditors, investors, ASIC
• Review of historical events
• Source and application of
• funds
• Solvency and other recoveries

• Entity by entity analysis
• Control of assets and operations
• Cashflow forecasts
• Asset and liability identification
• Valuations
• Sale and Deed of Company Arrangement
  opportunities

20
Investigation and Reporting

• Duty to investigate the companies affairs and
  report to creditors their preliminary findings
  in the s. 439A report.
• A focused team on investigation matters.
• Our review will consider a range of matters,
  including
• Formation and operation of the MIS projects under
  Rewards Projects Limited
• Promotion and accounting for the MIS projects and
  funds raised
• Capital and debt raisings
• Solvency of the companies
• Potential recoveries available to creditors

21
Questions from Creditors

• All questions to be directed to Chairman
• When asking a question, please clearly state your
  name and the name of the company you represent

22

• Formal Items of Business

23
Committee of Creditors

• Specific to companies
• Consult with and receive reports from the
  Administrators
• Assist the Administrators as a sounding board
  for proposals
• Approve the Administrators remuneration

24
Appointment of Administrators

• Creditors to resolve pursuant to Section 436E(4)
  of the Corporations Act 2001 whether or not
• To remove the Administrators from office
• To appoint an alternate administrator of the
  Companies
• No nominations for an alternate administrator
  have been received.

25
Closure of meetings

• Other business
• Final questions
• Next steps
• Report to creditors
• Second creditors meeting
• Thank you for attendance