Graphic: Tamar Devil
Timber company Gunns has foreshadowed a write down of its 200,000 hectare Tasmanian forest estate.
The company has told the Australian Securities Exchange the declining woodchip market has forced a review of the value of the asset.
The review is still underway and the company has not said how long it will take.
Gunns shares have been in trading halt for more than three months as the company negotiates a plan to raise about $400 million.
Financial analyst Matthew Torenius says it is bad news for shareholders.
“I would expect some quite substantial write downs potentially at the next financial result,” he said.
“The capital raising was looking like being done quite quickly and has now dragged out substantially.
“You would imagine the terms of any capital raising would have worsened for existing shareholders.”
The company says the woodchip market has also impacted on its capital raising efforts but confidential negotiations are continuing with “various potential investors”.
The finance expert view: John Lawrence here
• Hakan Ekstrom, Wood Resource Quarterly: Weaker pulp markets have resulted in lower wood chip and pulplogs prices worldwide, reports the Wood Resource Quarterly
Wood fiber costs, which can account for up to 70 percent of the production costs for a pulpmill, fell in many markets during the 1Q/12, according to the Wood Resource Quarterly. The biggest declines were seen in Western Canada, Europe and Brazil, while Chile, Australia and New Zealand experienced some minor price increases for pulplogs and chips during the quarter.
The full article can be found in the downloadable PDF file:
GTWMU_Global_pulpwood_markets_1Q_2012.pdf
• Examiner: Gunns confirms sale of Lindsay St site
First published: 2012-07-02 03:59 AM
