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Kangaroo Island Plantation Timbers gets more cash from timber insurance claim

The company is expected to fully repay its debt from the remaining insurance proceeds, leaving it with substantial net cash.

Kangaroo Island Plantation Timbers Ltd - Kangaroo Island Plantation Timbers gets more funds from timber insurance claim
Bushfires on the island had severely impacted the company’s assets

Kangaroo Island Plantation Timbers Ltd (ASX:KPT) is well funded to commence construction of the proposed Kangaroo Island seaport following the receipt of timber insurance proceeds.

The development approval for the seaport is expected in the coming months.

Timber insurance

KPT’s timber was insured for a book value of about $115 million, with an annual limit of $65 million and an excess of $5 million applying to any one claim.

The company received a $10 million insurance progress payment last month under its treecrop insurance policy.

Claims against another insurance policy, covering fire damage to houses, fences and sheds, are also being prepared by the company and a $1 million progress payment has now been received against the cost of replacing these assets.

CBA debt repayment

In accordance with the Commonwealth Bank of Australia (ASX:CBA) facility covenants, KPT is required to repay loans with any insurance proceeds in excess of $250,000.

In support of the company, CBA has requested only a partial repayment and it has been agreed that $8 million of the $11 million initial insurance proceeds will be used towards this.

The company’s debt will be immediately reduced to $21.7 million as a result, with this amount expected to be fully repaid from remaining insurance proceeds, leaving the company with substantial net cash.

Shares in KPT remain voluntarily suspended from trading on the ASX, in accordance with Listing Rule 17.2.

Quick facts: Kangaroo Island Plantation Timbers Ltd

Price: 1.16 AUD

ASX:KPT
Market: ASX
Market Cap: $65.5 m
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