Gunns: Questions for the Chairman

Questions for Chairman Gay Gunns AGM is this Thursday (Oct 30). Following Gunns’ last AGM described as a complete circus by many commentators (see http://www.crikey.com.au/Business/20071122-Cowboy-John-Gay-aborts-Gunns-AGM-prematurely-amid-tough-questioning.html ) readers have been requisitioning Tasmanian Times to organise questions to be submitted to tomorrow’s AGM, which may well be the last for the current Chairman. The following are a sample of the readers’ requests.

1. The Retail Entitlement Offer designed to raise $92m (at $1.50 per share)and which opened on 4th Sept 2008 succeeded in raising only $1.36m. Will the Chairman concede that two Directors who bought additional shares on the market on or about the 8th Sept 2008 for approx $1.40 per share rather than contribute to additional equity via the Entitlement Offer, did irreparable damage to the equity raising effort? What right minded shareholder would subscribe for additional equity at $1.50 per share when 2 Directors were picking up shares for a lesser price on market? Will the Board consider reprimanding Mr Gray and his fellow Director?

2. The dividends paid on or about 3rd October included approx $1.19m to Directors and associates, of which only about $426,000 was reinvested back into the Company via the Dividend Reinvestment Plan, leaving the Co to find about $760,000 in cash for the Directors. Is it fair to say that after expenses the Retail Offer amount of $1.36m was only enough to pay the cash dividends to the Directors in early October? Has this obvious lack of confidence by Directors in their own Company contributed to the current share price under $1.10?

3. Note 10 to the accounts indicates that an additional $4.6m was provided to cover losses on loans receivable. Does this all relate to MIS loans receivable? There has been a jump in doubtful loans from 0.55% to 2.37% in one year. With massive write offs being experienced by other MIS Companies does the Chairman expect a rise in doubtful debts this year? Will this have a double whammy effect on the bottom line as new MIS sales shrink?

4. The auditor described there being ‘significant uncertainty’ re the possibility of a Pulp Mill. Does the Chairman agree with this view? Was the auditor prevailed upon to drop his insistence that the mill costs be written off this year?

5. If the pulp mill costs to date are written off in 2008/09 will the Company still be profitable?

6. The Company advised the ASX that negotiations for the sale of $170m worth of plantation timber will be completed by late October. Has this been achieved? Has the Company arrived at satisfactory outcome or are buyers factoring in a higher discount rate in their calculation of market value? Will this higher discount rate cause the Company to reduce the value of it’s remaining standing timber? If so by how much?

5. The ASX wrote to the Company on 10th October requesting an explanation for the late lodgement of an ASX form. Shareholders are growing weary reading about the Company’s tardiness in lodging ASX forms, info to RPDC, to the Department of Environment in Canberra and so the list goes on. Could the Chairman kindly supply the latest Gregorian calendar to management to enable them to better track their lodgement dates?