Gunning for mill sale but who will pay?

THE sale of timber company Gunns' woodchip mill at Triabunna, said to be vital for a restructured Tasmanian forest industry, has become enmeshed in an argument over state government financing.

The mill was to be sold on 29 June to local company, Fibre Plus Tasmania, promising sawmillers future income from residue sales and aiding Gunns' debt-reduction program.

A spokesman for Fibre Plus confirmed yesterday it expected the sale in the ''not too distant future'' but had no completion date.

Gunns and Fibre Plus refused to disclose the purchase price, which is believed to be around $10 million. The sale is understood to hinge on resolution of the buyer's financing mix.

Fibre Plus's principal, Ron O'Connor, said the lion's share of the price would come from bank financing and his company's own resources, but he ran into Green opposition to a State Department of Economic Development loan to aid the purchase.

The Premier and Treasurer, Lara Giddings, accepted the recommendation of the state Economic Development Board to approve the undisclosed loan, a spokesman said. Final agreement depended on Fibre Plus meeting financing conditions.

The Greens, who hold the balance of power in the state parliament, said too much public money had been sunk into propping up an unviable woodchip industry and none should go into subsidising a purchase of the Triabunna mill.

Greens leader Nick McKim said the party did not support a loan to Fibre Plus, but added he was not aware of any gross malfeasance or corruption worthy of a no-confidence motion, as suggested by party member Kim Booth yesterday.

Ms Giddings and the federal government are yet to respond to the state's proposed forest peace package, presented to them by the former ACTU secretary, Bill Kelty.

Gunns closed up 0.5? at 28?.