A$154.1m sale of plantation forestry estate to MEAG

May 2022

On 12 May 2022, Midway Limited (Midway) signed an agreement to sell its existing 17,000-hectare plantation forestry estate in south-west Victoria, Australia to a client of MEAG, Munich Re’s asset manager, for A$154.1 million. As part of the sale agreement, MEAG has also committed to invest an additional A$200 million in development of new hardwood forestry plantations in Victoria, Australia over the next five years. Midway will provide ongoing plantation management services and also provide a binding offtake for all wood products from these assets.

ASX listed Midway is one of Australia’s largest wood fibre processors, involved in the production and export of wood fibre to producers of pulp and paper products throughout Asia.

The transaction has a material carbon element - the brownfield/greenfield assets are assumed to generate ACCUs (Australian carbon credit units) which represent a material component of the return for the greenfield assets (at circa 30% of the expected IRR). The sale of the existing plantation estate realises significant value for Midway shareholders and the MEAG greenfield commitment contributes towards the long-term-viability of the Midway’s processing and export facilities in Australia.

Azure acted as financial adviser to Midway in relation to the transaction.

Closing is expected to occur in the 3rd quarter of 2022 and is subject to Australian foreign investment approval.