This missive will be necessarily brief as it distracts from the wider task at hand. Problems with the email server have prevented a wider communication at this moment. 


Readers of this blog will have received another letter from EAM. Whilst their choice of words in places was unfortunate, this letter simply draws a line under a process from their end which has already been covered in this blog i.e. the formal closing of the funds and their involvement therein. That is not the same as a legal release… but they are drawing a line under it and that is entirely sensible in the circumstances. As further stated previously: their action really doesn’t alter the general situation much. 


There should have been an interim communication proceeding this one to update on delays in writing to investors and the final deployment of budget and execution of agreements. Apologies for being remiss in that area. 


In terms of progress since the last update, here is what has progressed and where it is all at:


Aequus is working with the Guernsey administrators of a fund with a small interest in Aequus Asset Management co-managed plantations to do the following:


  • Independently corroborate existence of assets
  • Geo-tag assets
  • Pay for a legal opinion vis a vie the merits of pursuing Touchwood Forestry in Thailand
  • Meet with the processors and off-take agreement counterparties. 


Item 3 will only confirm what has already more than adequately ascertained but it will be independently paid for and thus independent verification of statements that have made in the Blog and elsewhere. 


The remainder is an exercise in diligence from their end prior to them doubtless following in the footsteps of EAM. This all bills to them so it is real boon to the efforts to round this out properly. Support such as this is greatly appreciated. 


You can look forwards to independent verification of statements previously made.


A settlement figure for legal bills incurred during the earlier throes of what was supposed to be a valiant rescue of the assets has also been negotiated over the past month.  With hindsight, it is very clear that a formal wind up of the fund was the way to go from the moment of Touchwood Group’s implosion BUT that would have unquestionably resulted in a nil return net of liquidation fees. If any demonstration of that is required then you need look no further than previously described alternatives which themselves still fell short of a full and formal liquidation and the costs that accompanied such proposals. 


In relation to “the plan” to complete the informal wind up of assets without incurring formal liquidator charges, this is where Aequus now sits:


Off take agreement – not yet signed as there was a potential for a JV on processing which (potentially) may have increased the revenue potential here in respect of the unprocessed assets. The total cost of that exercise has now gone through due diligence, broken down properly and haggled over and Aequus would have to provide funding of around THB 2,000,000. Evidence of a sufficient (extra) risk/reward payoff was unconvincing but in any event such a sum is outside the budget and so Aequus cannot proceed on that basis.  


The budget is THB1,000,000. 


This budget has been amassed outside of Aequus Asset Management which has had no income since Touchwood Group collapsed. It has taken over 18 months to put together and basically represents a debt to the company which, in turn has no assets. This should have been in place 2 months ago but receipt of fees is being delayed and so there is, as always, a knock-on effect. 


The budget will be deployed as previously outlined with pre-processed ground material being processed into oil at a previously used factory where we achieved favourable results. It will then be shipped to Singapore under an off-take agreement under which oil will be blended or sold directly (as appropriate) to achieve the best available pricing. The off-take agreement generates no initial cash flow. It is the best deal out there at present. 


This sale process is unlikely to see us land a one-hit order for all produce so there will be a 2 year guillotine by which time any remaining unsold assets will be disposed of and the proceeds distributed pro-rated among investors in the funds. 


This compares favourably with our previous collaboration which has still yet to successfully sell the oil they processed for Aequus more than two years ago. Since they are Thailand’s largest exporter of Agarwood oil they provide a telling benchmark. It is, however, difficult to envisage this new collaboration being any worse. 


Of the totally unprocessed assets, these are now deemed better used for carvings for the China market predominantly and this will be handled separately. That shift in interest is about the only market movement that has any benefit here. The likely yield from oil processing after the time in storage due to factors well documented in this blog simply leaves carving as the best remaining choice. 


As stated on numerous occasions previously, all of this is far, far from ideal but the best that could be done has been done in light of budgetary constraints. At the point of final disposal of the last of the assets a distribution will be made. This will be independently audited. 


Current Singapore export prices are being checked over the next couple of days. There is no expectation of any positive shocks. Certainly the market in Thailand itself has remained pretty constant for the last couple of years. 


I see no point in revisiting factors that affect the price, or the saleability of the oil produced thus far as these are previously documented. The mission to close the book on this has literally just been awaiting two things: budget to execute and a suitable partner to handle the off-take. 


These are both now there and so will now be executed. Dates upon during which the independent corroboration described above can be delivered will be communicated once confirmed. An independent trustee will be engaged to handle any sale cash between receipt and distribution. 


Such measures should hopefully provide some measure of peace of mind all around.