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Table Of Contents
$ENITIONS
3UMMARY
)NVESTMENT 2ATIONALE
!BOUT THE 0ROMOTER
-ANAGEMENT 4EAM
)NVESTMENT 3TRUCTURE AND %XIT -ECHANISM
)NVESTMENT 0ROCESS
)LLUSTRATIVE &INANCIAL -ODEL
-ARKETS FOR 4EAK
0ANAMA AS AN )NVESTMENT ,OCATION
4AXATION 3UMMARY
&EES AND #HARGES
&REQUENTLY !SKED 1UESTIONS
2ISK &ACTORS
)MPORTANT .OTICE
)NVESTMENT 3TEPS
)NVESTMENT !PPLICATION &ORM
!PPENDIX $ELOITTE 4AX /PINION
Placing Commission
B Ordinary Share
A B Ordinary Share of 1, the Capital of the Company.
Clearfell (clearcut)
Plantation
Company
Promoter
Placing Proceeds
Risk Factors
Loan Note
Shareholder
Document
Management Fee
The annual fees payable by Panama Teak Investments Plc,
through its subsidiary, to Green Belt (Panama) Ltd. for
supervising all aspects of plantation management.
Investor or Placee
Investor or Company to whom this Information
Memorandum is made available and who opts to invest in
the Company.
ITTO
International Tropical Timber Organisation. An
intergovernmental organisation promoting the conservation
and sustainable management, use and trade of tropical
forest resources. Web address www.itto.or.jp
Placing Agent
Solas Financial.
Thinning
A partial cutting or respacing operation made in an
immature forest stand to accelerate the growth of the
remaining trees.
Incentive
An incentive which will be payable to the Promoter at the
end of the investment term. This incentive is only payable
on investment returns in excess of 8% compounded
growth per annum to Investors (pre-tax, after all costs). The
management incentive is 33% of the investment growth
over the initial 8% compounded return per annum. The
target return of 400,000 per 50,000 invested is net of
any such incentive.
Summary
Investment Rationale
Low volatility:
The investment has low levels of internal gearing which should result in a lower
risk prole.
Asset Backed:
The investment proceeds will be used to purchase land in Panama and grow
teak crops.
Stable Demand:
Teak has historically exhibited stable demand and price growth.
Turnkey Investment:
The investment is turnkey with no management required by Investors.
Private Pensions:
The investment is open to Self Administered Pensions Schemes and non
standard PRSA accounts.
Management Team
Joe OCarroll,
Strategic Business Development Manager
Joe OCarroll has a rst class honours degree from UCD
(B.Agr.Sc.) and an MBA (honours) from UCC. He has
completed executive training with the IMI, the Institute
of Transport and Logistics and the Kennedy School at
Harvard University. After graduation Joe worked with the
Department of Agriculture in Northern Ireland before
joining Willamette Europe Ltd. (now Weyerhaeuser). From
2000 he spent 5 years as Operations Manager of COFORD,
the National Council for Forest Research & Development,
where he oversaw the implementation and execution of a
national programme for forest industry development. He
was instrumental in delivering the 2003 Bacon report on
the Forest Industry. In 2003 he completed an internship
with the Division of Energy Resources (Commonwealth of
Massachusetts).
Prior to joining Green Belt Limited, he was Managing
Consultant of OC Consulting, which specialises in business
development guidance for companies in the natural
resources, renewable energy and pharmaceutical sectors. He
is also managing director of the renewable energy company,
Imperative Energy Ltd. (www.imperativeenergy.ie) and Green
Belt Carbon Balance Ltd. (www.carbon-balance.com).
Cash Investment
Investors
Irish Teak
Investments SA
Management Agreement
Plantation Management
Timber Marketing and Sales
Green Belt
(Panama) Ltd
Land and
Plantations
Governance
All strategic decisions will be taken by the board of
directors of Panama Teak Investments Plc. The board of
directors will include two executives, initially Mr. Maurice
(Mossie) Ryan and Mr. John OReilly, and at least two
non-executive directors. The chairman will be one of the
non-executive directors. The investors will have the right to
nominate a non executive director.
The Memorandum & Articles of Association of the
Company do not allow a dividend to be paid to any
shareholder in Panama Teak Investment Plc.
Pension Investors
The Promoter believes this investment is suitable as a
private self administered pension investment. In the event
of death or early retirement, investors or an investors estate
will be given the choice of remaining in the investment
until wind up or be allowed to redeem their investment.
This encashment could be effected by a number of means
including a renancing of the assets held by Irish Teak
Investment SA at that time or from internal cash reserves.
Investment Process
Value Maximisation
Harvest at optimal time
Develop local processing capacity
10
Model Overview
(sample 50,000 investment)
Contributed Capital
1,500
Investor
Return
Compound
Annual Rate
of Return (net
of all fees) %
-2
216,320
8.48
293,950
10.34
401,000
12.26
547,910
14.23
748,500
16.22
51,500
Teak Price
Ination
(real) %
50,000
400,000
12.26%
1
2
Key Assumptions
Deposit interest rate
4.50%
6.00%
2.00%
3.00%
2.00%
3.00%
22.34
40.89
166.51
$80.00
$135.00
$290.00
6.5
$2,200
$1,690
11
12
The spike in log prices in 2002 was due to the uncertainty surrounding a proposed
US trade embargo on Myanmar (major exporter of teak at the time).
13
Panama is a well-located, politically stable and welleducated country. The economy in Panama is focused
on banking, mining, commerce and tourism, with the
canal and the shipping business playing an important
role. The Government has introduced many investment
incentives such as a favourable tax regime on income
derived from forestry operations. Copper mining began to
have signicance only quite recently, but Panama is now
emerging as one of the worlds major producers, with gold
mining also making a contribution.
Geography
The Republic of Panama lies in Central America between
the Caribbean Sea and the North Pacic Ocean. There are
land borders of 225 km with Colombia (on the west) and
330 km with Costa Rica (on the east). The land area totals
75,990 sq km. The capital is Panama City. The Panama
Canal links the North Atlantic Ocean via the Caribbean Sea
with the North Pacic Ocean.
The climate is tropical with prolonged rainy periods between
May and January. There is a brief dry season between
January and May. Panamas international airport is connected
by many international carriers to most world centres. There
are two sea ports, Balboa and Cristobal (at either end of the
canal). The time zone is 5 hours behind GMT.
MEXICO
Size:
Government:
GDP:
Growth:
Ination:
BELIZE
GUATEMALA
HONDURAS
NICARAGUA
PANAMA
14
COSTA RICA
SOUTH AMERICA
Taxation Summary
15
16
Is my investment capital
guaranteed?
17
18
Risk Factors
Injurious Factors
Forest plantations are generally
susceptible to a range of injurious
factors such as re and wind in the
rst four years of growing. Teak trees
then become resistant to re as the
bark (which is re resistant) is thick
enough to protect the tree against
high temperatures experienced
during forest re. Teak plantations
are traditionally not prone to wind
damage. The threat of wind damage is
further avoided through the selection
of appropriate sites. In addition,
Panama is not within the normal
pathway of tropical storms. As a result
of the factors outlined above, it is
proposed to insure the plantations
against re and wind damage for the
rst ve years only, in keeping with
normal practice in Panama.
Investment Risk
The value of any investment made
into Panama Teak Investments Plc
can go down as well as up and the
amount investors receive back from
the investment may be less than
the amount they originally invest.
Legislation
Governmental authorities at all
levels are actively involved in the
promulgation and enforcement of
regulation relating to taxation, land use
and zoning and planning restrictions,
environmental protection and health
and safety in the industry and the
economy in general. The introduction
of new laws and regulation (or
changes in their interpretation) and
their enforcement could have the
effect of increasing the costs and
lowering the income or rate of return
from, as well as adversely affect the
value of the Companys assets.
Tax Risks
The information contained in this
Information Memorandum is based
on the Promoters understanding of
current tax legislation and practice in
Ireland and Panama. Tax legislation
and its interpretation and practice
are subject to change during the
investment period, possibly without
notice. Such changes may have an
adverse effect upon the investment
returns and/or result in taxation issues
for investors.
19
Liquidity Risk
This is a long term investment and
the B Ordinary Shares and Loan Notes
to be issued to Investors will not be
transferable or tradable. Investors
should not consider this investment
unless they are prepared to wait until
the end of the projected investment
period for their initial capital to be
returned as it will not be possible
to encash, realise or transfer the
investment prior to its maturity (other
than on death or in the case of early
retirement).
20
Valuation Risk
Forestry related assets are inherently
difcult to value due to the lack of
uniformity of product. As a result,
valuations are subject to uncertainty.
There is no assurance that the
estimates resulting from the valuation
process will reect the actual sales
price even where such sales occur
shortly after the valuation date.
However, as a commodity, there are
comparable prices that can be used
to determine reasonably accurate
valuations.
Important Notice
21
Investment Steps
A.