Funding fight holds up sale of woodchip mill

The sale involves the Gunns woodchip mill at Triabunna, a facility described as critical to a restructured Tasmanian forest industry. The deal was intended to transfer the mill from Gunns to a local buyer and is tied to future residue sales for sawmillers and Gunns' debt reduction efforts.

The buyer is a local company called Fibre Plus Tasmania. A spokesman for Fibre Plus confirmed the company expected the sale in the "not-too-distant future," and the company's principal, timber transport operator Ron O'Connor, has been publicly involved in discussing the purchase and financing.

Gunns and Fibre Plus refused to disclose the exact purchase price, but the sale is believed to be about $10 million.

The mill was due to be sold on June 29, but Fibre Plus did not state a firm completion date and only said it expected the sale in the "not-too-distant future." The transaction is understood to hinge on resolving the buyer's financing mix.

The sale was promoted as promising sawmillers future income from residue sales and as an important part of creating a restructured Tasmanian forest industry. It was also intended to help Gunns reduce its debt as part of broader restructuring.

The completion of the sale depends on the buyer's financing mix. Fibre Plus planned to fund the lion's share from bank financing and company resources, but the proposed involvement of a state Department of Economic Development loan became a point of contention.

The Greens, who hold the balance of power in the Tasmanian Parliament, opposed using a state loan because they argued too much public money had already been used to prop up an unviable woodchip industry, and they said none should go into subsidising a purchase of the Triabunna mill.

Political opposition — specifically the Greens' resistance to a state Department of Economic Development loan — has enmeshed the sale in an argument over government financing. That dispute has held up completion by leaving the buyer's financing mix unresolved.