Quintis Limited (Administrators Appointed) (Receivers and Managers Appointed) And entities listed in Annexure A ACN (the Quintis Group)

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1 Quintis Limited (Administrators Appointed) (Receivers and Managers Appointed) And entities listed in Annexure A ACN (the Quintis Group) Circular to Employees Shaun Fraser, Rob Brauer and I were appointed Receivers and Managers of the Quintis Group on 23 January Our appointment follows the appointment of Richard Tucker, Scott Langdon and John Bumbak of Korda Mentha as Voluntary Administrators on 20 January Background As Receivers and Managers, we have assumed control of the Quintis Group s affairs and have entered into possession of its assets. It is our intention to continue trading the Quintis Group s business with the support of the Senior Secured Noteholders (the Noteholders ) while longer term strategic options for a sale or recapitalisation are investigated. The insolvency process provides the Quintis Group with an opportunity to resolve a range of legacy issues which have created significant uncertainty for the Quintis Group and impacted the ability of external parties to contribute new capital. We plan to commence an on market public sale process in the coming weeks and anticipate engaging with a number of parties who have expressed interest in participating in a longer term solution for the Quintis Group. The Noteholders are very supportive of the Quintis Group and have expressed a desire to work with stakeholders during the process to find a suitable outcome. In that regard, the Noteholders have provided funding to support the receivership and ongoing operations. Our focus is on ensuring the business continues to operate on a business as usual basis. There are no material changes to operations planned. However, we will work with management to continue to identify opportunities to improve operations and ways to enhance the value of the company for all stakeholders. In that regard, we ask that you continue to perform your day-to-day duties as usual. During the period of our appointment: the terms of your employment continue unchanged. There is no change to your employing entity. While the Receivers and Managers do not adopt your employment contract, we are personally liable for your wages and entitlements during the period of our appointment; you should continue to report and take instructions from your usual manager; wages and entitlements for continued employment will be paid by the Receivers and Managers on the same time cycles as prior to our appointment; there will be no change to arrangements for leave planned or leave to be approved; and safety continues to be the highest priority and we remind all employees to continue to follow all OH&S protocols. Pre-appointment entitlements Claims against the Quintis Group for certain categories of employee entitlements, for the period prior to my appointment, may receive priority payment under the Corporations Act. At this point, we believe that there are likely to be sufficient assets available to meet employees pre-appointment claims. As soon as the position of priorranking claims has been clarified and the Quintis Group s asset position determined, we will advise you further. Other matters and contact details A schedule setting out the responsibilities of employees of a company in receivership is attached for your guidance. A copy of the information sheet, Insolvency information for directors, employees, creditors and shareholders, issued by the Australian Securities & Investments Commission (ASIC) is also attached for your information. 1

2 If you have any queries, please contact Lauren Del Monte on (02) or or James Clark on (08) or For further information, please refer to the McGrathNicol website ( Thank you in advance for your cooperation. Dated: 24 January 2018 Jason Preston Receiver and Manager Enclosures: 1 Annexure A Quintis Group entities over which the Receivers and Managers are appointed 2 Schedule of responsibilities of officers and employees 3 ASIC Insolvency information for directors, employees, creditors and shareholders information sheet 4 Employee Frequently Asked Questions 2

3 Annexure A: Quintis Group Company name Administrators Appointed Receivers and Managers Appointed ACN Quintis Ltd Yes Yes Arwon Finance Pty Ltd Yes Yes Australian Sandalwood Oil Co. Pty Ltd Yes Yes Mount Romance Australia Pty Ltd Yes Yes Mount Romance Holdings Pty Ltd Yes Yes Quintis Forestry Ltd Yes Yes Quintis Leasing Pty Ltd Yes Yes Sandalwood Properties Ltd Yes Yes

4 Quintis Limited (Administrators Appointed) (Receivers and Managers Appointed) And entities listed in Annexure A ACN Responsibilities of Officers and Employees The duties and responsibilities of the officers and employees of a company in receivership are set out below for your guidance. All documents issued by the company must have (Administrators Appointed) (Receivers and Managers Appointed) after the company name where it first appears on the document. When a company is placed in receivership, the powers of the directors and other officers are suspended. However, under certain circumstances, and only with the consent of the Receivers and Managers, those powers may continue. Some obligations of the directors will continue to apply, for example the obligation to lodge Annual Statements with ASIC. The Receivers and Managers may carry on the business and may employ or remove an officer or employee for this purpose. Without the express written authority of the Receivers and Managers: We are revising delegated authorities for staff able to commit to liabilities on behalf of the Company. You should not commit to any liability unless you have been notified that you have delegated authority to do so. No goods will be accepted by the company from any source whatsoever that are not the subject of an order approved nominated representative of the Receivers and Managers or manager with appropriate delegated authority. No credit will be incurred. No payments will be made. No goods will be returned to any supplier. All cash and cheques received will be passed to the Receivers and Managers. No assets of the company will be removed from the company s custody without the written approval of the Receivers and Managers. All assets are to be secured against theft, under lock and key. The entire assets and undertaking of the company are under the express and sole control and custodianship of the Receivers and Managers and may only be dealt with by the Receivers and Managers. If you have any queries, please contact Lauren Del Monte on (02) or ldelmonte@mcgrathnicol.com. 4

5 Insolvency information for directors, employees, creditors and shareholders This information sheet (INFO 39) lists ASIC's information sheets for directors, employees, creditors and shareholders affected by a company's insolvency. We have produced these with endorsement from the Australian Restructuring Insolvency & Turnaround Association (ARITA). The information sheets give a basic understanding of the three most common company insolvency procedures liquidation, voluntary administration and receivership as well as the independence requirements for external administrators and approving external administrator remuneration. There is also a glossary of commonly used insolvency terms. List of information sheets INFO 41 Insolvency: A glossary of terms INFO 42 Insolvency: A guide for directors INFO 43 Insolvency: A guide for shareholders INFO 45 Liquidation: A guide for creditors INFO 46 Liquidation: A guide for employees INFO 54 Receivership: A guide for creditors INFO 55 Receivership: A guide for employees INFO 74 Voluntary administration: A guide for creditors INFO 75 Voluntary administration: A guide for employees INFO 84 Independence of external administrators: A guide for creditors INFO 85 Approving fees: A guide for creditors Where can I get more information? Further information is available from the ARITA website. The ARITA website also contains the ARITA Code of Professional Practice for Insolvency Practitioners. This is Information Sheet 39 (INFO 39) updated on 1 September Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Last updated: 01/09/ :57

6 Quintis Limited (Administrators Appointed) (Receivers and Managers Appointed) And entities as listed in Annexure A ACN (collectively known as the Quintis Group ) Employee Frequently Asked Questions 24 January 2018 The purpose of this document is to answer some immediate frequently asked questions that employees may have about the receivership. The Receivers and Managers will update employees regularly on the status of the receivership and their employment, particularly in the early phases while we undertake a financial and operational assessment of the Quintis Group. Employees should direct any additional questions to their supervisor in the first instance, and then to the Receivers and Managers representatives. The Receivers and Managers will also add to this document as required and updated versions may be accessed on the McGrathNicol website. In this document, any reference to wages includes employees paid either on hourly-based or salary-based wages. The Receivers and Managers act as agents of the Quintis Group. By issuing this information sheet, the Receivers and Managers are not adopting any contract of employment that exists, or may have existed, between any employee and any member company of the Quintis Group. Will my wages be paid up to date? Yes, on the normal pay-run cycle. The Receivers and Managers are personally responsible for paying employee wages for work completed from 23 January 2018 onwards. You will continue to be paid in the usual manner (i.e. payroll will occur in the same frequency as before the receivership unless otherwise advised). The funds will be drawn from the Receivers and Managers bank account and wages paid by the Receivers and Managers will refer to Receivers and Managers Appointed on the payslips. Will I be paid the same wage as before? Yes. While the Receivers and Managers do not personally adopt your employment contract, the Receivers and Managers will pay wages in accordance with your current contract, award, Enterprise Bargaining Agreement or other industrial instrument. Will my superannuation be paid? The Receivers and Managers will deduct superannuation as usual from your wages and remit to your nominated superannuation fund for the period following the date of their appointment. Any deductions from your wages for superannuation that were not remitted to your superannuation fund by your employing entity for the period prior to the Receivers and Managers appointment will be paid by the Receivers and Managers. 1

7 Will other deductions continue to be made from my wages such as private health, child support and salary sacrifice? Yes, the Receivers and Managers will deduct payments as usual and remit to third parties for the period following the date of their appointment. Can I claim an employee reimbursement? If you need to incur an expense in the ordinary course of business, please seek approval in the normal way prior to the expense being incurred. If you have any unpaid employee expenses for the period prior to my appointment, please submit for payment by the Receivers and Managers in the ordinary course. Will I continue to accrue leave? Yes, during the receivership you will continue to accrue annual, long service and sick leave and other entitlements. I have been approved to take leave after 23 January Can I still take leave and will it be paid? Until further notice, any leave that has been approved prior to the receivership will be honoured and paid as usual. I would like to take leave in the future but have not put in a leave request form. What should I do? Leave should be applied for in the normal way for consideration by your supervisor or manager, who should then consult with the Receivers and Managers. Will I receive a redundancy payment if I resign? No, you are not entitled to any redundancy payment if you resign. Will I receive a payment summary for FY18? Yes. The payroll team for your employing entity will prepare payment summaries for the period 1 July 2017 to 22 January These will be issued to you as normal after the end of the 2018 taxation year. The Receivers and Managers are responsible for preparing and distributing payment summaries for the period from 23 January 2018 onwards. Will we be provided with a detailed breakdown of our entitlements, set out under various headings such as accrued annual leave and accrued long service leave? If so, when will this occur? You will be provided with a breakdown of your entitlements as soon as possible. The Receivers and Managers are currently checking the calculation of outstanding entitlements and will provide you with this information as soon as possible. What happens to my pre-appointment leave balances? You have a claim against your employing entity for entitlements that accrued before the Receivers and Managers appointment. This includes your pre-receivership leave accruals (including long service leave and annual leave). Employee entitlement claims rank in priority to most other unsecured claims and, the claims of secured creditors in 2

8 relation to circulating assets (e.g. inventory, debtors, cash). While we need to undertake an assessment of these assets, on current information, it appears likely that these are sufficient circulating assets to cover currently known employee priority claims. We will confirm this position in due course. In the event of a sale or recapitalisation, claims for continuing employee entitlements continue with the employing entity. In the event any employee is made redundant, employee entitlements would be paid from realisation proceeds of circulating assets when available. What is the first meeting of creditors? The Administrators are required to hold a meeting of creditors within eight business days of their appointment. You will receive formal notification of the meeting details for your employing entity over the next few days. Should I attend the first meeting of creditors? As creditors, employees are entitled to attend the first meeting of creditors. However, as the meeting will take place on a business day, the Receivers and Managers request that employees attend to their usual duties. However, we recommend employees appoint a representative group of colleagues to attend and report to employees on the meeting. Two of these colleagues may wish to join any committee of creditors established for the Voluntary Administration representatives to act as their proxyholder - that may be another employee or a union representative. We will liaise with the Senior Management Team on appropriate arrangements. What if I have further questions about the first meeting of creditors? The first meeting of creditors is held by the Administrators, and any questions relating to the first meeting of creditors should be directed to them. Fair Entitlements Guarantee ( FEG ) In the event that your employing entity goes into liquidation, there is a Government scheme called the Fair Entitlements Guarantee Act ( FEG ). FEG assists employees who have lost their employment due to the liquidation of their employer and who are owed certain employee entitlements. FEG covers up to 13 weeks unpaid wages, annual leave, long service leave, up to five weeks payment in lieu of notice and up to four weeks redundancy pay for each year completed plus a pro-rata for each part year, subject to certain income limits. Please note, FEG is only applicable in the event of liquidation. How certain is my continued employment? The Receivers and Managers review of staffing requirements will be ongoing and subject to our obligation to endeavour to maximise the chances of the companies, or as much as possible of their businesses, continuing in existence. At this stage, we have strong support from the Noteholders and sufficient funding to continue operations through the receivership. At this stage, we do not anticipate any significant redundancies. However, we will review operations during our appointment and may consider a small number redundancies to improve operational efficiency and to reduce costs. Further communications will be provided to staff when that process has been finalised. 3

9 What is the role/authority of the Quintis Group s directors? Do we take direction from them or from the Receivers and Managers? The Receivers and Managers make financial and strategic decisions relating to the Quintis Group and have ultimate executive control of the Quintis Group. The Quintis Group s directors powers are suspended in the receivership. However, we plan to operate on a business as usual basis and employees should continue to report through their usual chain of command. When completing forms (i.e. the Census, bank forms and applications), do I list my employing entity as my employer? The relevant entity in Quintis Group is still your employer and should be listed on any census, bank forms and applications you complete. Please note the Receivers and Managers do not personally adopt your employment contract. Further information and support Employees should direct any additional questions to their supervisor in the first instance, and then to the Receivers and Managers representatives. The Receivers and Managers will also add to this document as required and updated versions may be accessed on the McGrathNicol website ( 4