Longreach has issued its fourth series of commercial paper, A$13.41 million of asset-backed medium term notes. The underlying assets are loans to growers of Tasmanian blue gum, olive groves and almond plantations. Allco Management Ltd arranged and lead managed the deal.

The loans are originated by Timbercorp Finance. In February Timbercorp Finance securitized loans funding investments in forestry plantations via the Asia Pacific Receivables Corp., which issued A$41.42 medium term notes.

The trustee, RIL Finance Pty, will purchase the loans on behalf of a special purpose trust, the Timbercorp securitization trust. The trustee will fund the purchase with a secured loan worth 80% of the initial pool amount. Longreach CP will provide this loan, which it will fund by issuing the A$13.41 million notes. The secured loan will have a term to maturity until the final distribution date.

The trustee will also fund the purchase of the receivables by means of a subordinated loan worth 20% of the initial pool amount. Timbercorp Finance will provide this loan. The notes are issued as a segregated series and, there will be no recourse to any other of Timbercorp's assets.

The issuer receives fixed rate interest for the secured loan it made to the trust, but pays floating rate interest on the notes. The interest rate mismatch is hedged under a swap agreement with SG Australia.

Standard & Poor's rated the notes provided a triple-A rating to the Class A notes, which totaled A$10.1 million, a double-A-minus rating to the class B A$670,000 notes and Class C, of A$2.7 million was a subordinated loan and was not rated.

Final maturity for the rated notes is December 29, 2008. The class A notes have 25% credit support, 5% form the class B notes and 20% from overcollateralization. The class B notes have 20% credit support from overcollateralization. There will be A$700,000 liquidity reserve, or a trap of all excess spread, available as support for the rated notes.

Olive loans form 50% of the pool collateral, timber loans form 45% of the pool collateral, and almond loans form 5% of the pool collateral. The loans are part of a managed investment scheme, under which borrowers can claim their investment in one or more hectares of land as a 100% tax deduction, in the year the payment is made. Borrowers lease timber lots for 11 years, and for the almond and olive projects, they lease the land on a long-term basis.

Timbercorp Finance is a subsidiary of Timbercorp Ltd. It was set up in 1987 to fund Timbercorp Ltd's plantation and forestry activities in Australia.

Longreach issued its last series of commercial paper in December 2000. This was A$147.2 million issue which funded a loan to SAC nominee Australia Pty Ltd. The loan was secured by a head lease to Quantas Airways, a triple-net sublease to Quantas, and a residual value insurance policy from Mitsui Marine & Fire Insurance over the Sydney Airport Centre.

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