Gunning for mill sale but who will pay?

The sale refers to timber company Gunns' woodchip mill at Triabunna, a transaction described as important for a restructured Tasmanian forest industry. For investors, the deal matters because it was expected to help Gunns reduce debt and provide local sawmillers with future income from residue sales, which could affect the company’s financial position and regional forestry economics.

The buyer is a local company called Fibre Plus Tasmania. Fibre Plus’ principal, Ron O’Connor, confirmed the company expected the sale to proceed in the “not too distant future,” but the parties had not announced a firm completion date.

Gunns and Fibre Plus declined to disclose the purchase price, but the sale is widely believed to be around $10 million. The exact figure was not publicly confirmed in the article.

Ron O’Connor said the lion’s share of the purchase price would come from bank financing and Fibre Plus’ own resources. The sale was understood to hinge on resolving the buyer’s financing mix, including a proposed government loan.

The state Economic Development Board recommended an undisclosed loan to assist Fibre Plus, and Premier and Treasurer Lara Giddings accepted that recommendation. However, the Greens — holding the balance of power in state parliament — opposed using public funds, arguing too much taxpayer money had already gone into supporting an unviable woodchip industry and none should subsidise the Triabunna mill purchase.

Greens leader Nick McKim said the party did not support a loan to Fibre Plus but also stated he was not aware of any gross malfeasance or corruption that would warrant a no-confidence motion. Other Greens members had been more critical about public subsidies to the woodchip industry.

As reported, Fibre Plus expected the sale to occur in the “not too distant future,” but no completion date had been set. Final agreement was conditional on Fibre Plus meeting its financing conditions, so progress depended on resolving the financing mix.

If completed, the sale was intended to aid Gunns’ debt-reduction program and to provide sawmillers with future income from residue sales. The transaction’s progress and any government financing decisions could therefore influence Gunns’ financial outlook and revenue opportunities for local sawmill businesses.