FIRB approves US deal for TFS

WA sandalwood grower TFS Corporation says the Foreign Investment Review Board has approved an investment management agreement between it and a US-based institutional investor.

Under the agreement, which TFS announced on May 26, TFS will manage a 180-hectare Indian sandalwood plantation to be planted this year.

Investment by the US-based institution over the life of the plantation, excluding performance bonuses to TFS, is anticipated to be around $20 million.

The investment could grow by another $100 million if an option is exercised to plant an extra 180 hectares per annum for the next five years to 2015.

The agreement is subject to and conditional upon the settlement of a related land acquisition agreement with TFS.

The land acquisition agreement was conditional upon the investor obtaining FIRB approval.

Under the deal, TFS is paid an upfront payment for the purchase of the land and establishment of the plantation, annual payments for plantation management, and a performance bonus upon a hurdle rate of return being achieved by the investor.