Don’t invest in John’s company

Paul Oosting Wilderness Society MR

A LEADING international investment firm has recommended investors sells Gunns shares, others such as JP Morgan are agreeing.
A major investment group has labeled Gunns Limited as high risk and recommended investors sell Gunns shares due to blowouts in cost and timing for the project and the rising Australian dollar. The Wilderness Society is calling Gunns banker the ANZ to reconsider it positions on the project and walk away now before investors, shareholders and customers savings are damaged by the highly risky pulp mill.

“First there were huge blowouts in the cost and timing of the pulp mill, now investors are being advised to ‘sell’ their shares in Gunns by one of the biggest investment groups in the world. The ANZ bank and the Federal Government need to reconsider their support for Gunns’ destruction of Tasmania’s native forests and immediately walk away from the pulp mill,” said Mr Paul Oosting pulp mill campaigner for The Wilderness Society.

The Citigroup report obtained by The Wilderness Society says:

“Diminishing pulp mill value – The timeframe for Gunns’ proposed pulp mill has been pushed back yet again (now another 4-6 months), financing has yet to be finalised, and capex is now estimated by Gunns at $2.0bn (up from previous guidance of $1.7bn and $1.2bn two years ago). Our target price is lowered by $0.25 to $3.20 and we downgrade our recommendation to Sell / High Risk (previously Hold).”

Today another investment firm JP Morgan had a research paper release. Like Citigroup JP Morgan have increased the risk profile associated with Gunns due to the pulp mill:

“With the prospect of a A$2 billion mill to fund (which will occur, according to GNS, primarily through project finance debt,) this causes the risk profile of the stock to rise a little beyond our comfort levels,” JP Morgan said in a research note .

“ANZ customers and shareholders should be extremely worried by their banks consideration of funding this project which has been shown to be high risk and unprofitable,” said Mr Oosting. “It is likely other analysts will follow the recommendations of Citigroup a leading international financial group and recognise the huge risk that Gunns’ pulp mill poses.”

“The Citigroup and JP Morgan reports highlight just how risky and unprofitable Gunns’ proposed pulp mill is, Tasmania’s economy will suffer unless the Rudd Governemnt and ANZ walk away from the project ” said Mr Oosting.