Gunns clears decks for mill hand-over

Gunns managing director Greg L'Estrange said a 120,000 tonne stockpile at the plant on Tasmania's east coast had been cleared, and the chips sold into the tightly competitive Chinese market.

The $10 million paid for the mill by Retail Adventures' Jan Cameron and Wotif founder Graeme Wood is to go towards Gunns' debt reduction program, which Mr L'Estrange said was making good progress.

"We are continuing to move out of non-strategic and debt yielding assets," Mr L'Estrange told BusinessDay. "And we've got more work to do."

At last report debt stood at roughly $600 million, he said. Gunns has since been able to meet repayment needs of around $55 million at June 30, helped in part by the sale of its "green triangle" plantations for about $107 million.

Mr L'Estrange defended the sale against criticism that it would bring closure of a mill regarded as vital to the state's native forest industry.

He said Gunns forewarned industry leaders that a deal with local logging company Fibre Plus could not be completed, and had ensured a clause in the contract requiring Ms Cameron and Mr Wood to keep the chip mill operating, but for an undefined period.

Tasmanian Premier Lara Giddings last night began negotiations with the pair, in an effort to obtain long-term guarantees for the mill's operation.

A claim that Gunns sold the Triabunna mill cheaply to clear the decks for the $2.2 billion Tamar pulp mill project was rejected. "No, we're not about to announce a joint venture partner for the pulp mill," Mr L'Estrange said.

Gunns plans to begin earthworks next month for the mill, ensuring that along with $230 million already spent, it would satisfy a state government environmental permit deadline for a substantial start.