Gunns plans more sales in search for mill partner
FORESTRY group Gunns is making contingency plans to sell more assets as a radical reshaping leaves it short of an equity partner for its Tamar pulp mill project.
FORESTRY group Gunns is making contingency plans to sell more assets as a radical reshaping leaves it short of an equity partner for its Tamar pulp mill project.Gunns shares resumed trading yesterday after a six-week suspension and, despite volatile early movement, it closed at 20.5? - its low at the August 4 halt.The company confirmed its focus on the $2.3 billion Tamar project, but the managing director, Greg L'Estrange, was unable to shed any further light on a financial close, except to say negotiations were "well advanced".Instead, a market update from Gunns said it saw gaining an investment partner as material to meeting an obligation to retire $340 million in primary debt in January 2012.It is still to decide whether to sell its main remaining Tasmanian land and tree assets, valued at $680 million, after closing or selling off sawmills, a chip mill, its hardware, wine and walnut holdings, as well as its Launceston head office.Gunns' plantation woodchip income stream is shifting from Tasmania to Victoria and South Australia, where most chips would be sourced for 2012 exports.The $34.5 million Gunns gained during the suspension in a settlement with the Tasmanian government again came under attack from the Liberal opposition as an unnecessary handout for a voluntary exit from native forest logging.But Mr L'Estrange said: "Considering what we handed back, it is a relatively modest return."He said Gunns stopped receiving wood from native forests in 2011 but still held $30 million to $40 million of sawn native timber.Together with the sale of decommissioned sites, this was expected to generate about $60 million in cash flow.The company is battling claims it failed to "substantially commence" the pulp mill project by August 30 as required under Tasmanian Environmental Protection Authority permits.The authority is considering the issue, but Gunns said bulk earthworks for the site began on August 29 and the company had spent more than $200 million on the project so far.