Phaunos Timber Fund needs to raise cash as one of its holdings, Greenwood Timber, looks likely to make a cash call on the company and one of its main revenue producing assets, the New Zealand timber plantation at Mataraki, has suspended its dividends as a consequence of falling timber prices in China (as cautioned earlier this year).
Stafford Timberland, the new manager, warn that their is a chance that Phaunos could be unable to pay its liabilities within three to six months. They have also said in the past that they would prefer that Phaunos Timber held two year’s operating costs in cash.
The Board have decided to turn to shareholders and will raise money by placing 5% of the company’s share capital (rather than making a fire sale of one of the investments – although they are exploring the sale of one of their investments). The Board say they believe this fund raising will be a one-off event. They are also looking at securing a debt facility.
The details of the placing are not yet available but will be announced soon and, they say, Phaunos Timber’s interims will be announced by the end of August.