OPPONENTS of forestry company Gunns are in talks with several of its major shareholders about ending old-growth logging in return for a “social licence” and green accreditation.
The secret detente began after The Australian last month reported that high-profile opponents of Gunns’ proposed Tamar Valley pulp mill had extended an olive branch to the company.
They included prominent businessman Geoffrey Cousins, who said he was prepared to embrace the project, and even the company, if it adopted Forest Stewardship Council certification and mill improvements.
“After that story, one of the major shareholders (in Gunns) contacted me and others for a meeting,” Mr Cousins told The Australian yesterday.
“As a result of that meeting, shareholders felt that there was an opportunity to take the company forward and completely change the company attitude to all of the issues that have plagued it over the last many years.
“Particularly (discussed) was the issue related to management of forests and FSC certification,” he said.
Gunns chairman John Gay was recently reported as confirming pressure had been applied from institutional shareholders for his resignation, and those of fellow board members Richard Millar and Robin Gray, a former Liberal premier.
Mr Gay signalled he had no intention of quitting, and the calls were explained in the context of a 98 per cent drop in half-year earnings.
The Australian understands conservation group The Wilderness Society has also been in discussions with institutional shareholders keen to find a way of turning around Gunns’ image, share price and profit slump.
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It is understood four Japanese customers of Gunns are in Tasmania speaking to the company’s opponents, including anti-mill groups, and seeking their views on how Gunns could end the social conflict over forestry.
Mr Cousins said meetings with several Gunns institutional shareholders had occurred in the past two weeks. Feedback was extremely positive and the dialogue was ongoing.
He would not name the institutional shareholders but said they were large enough to force change. “The view of some (shareholders) is that a complete review of the pulp mill project is required,” he said.
“And to my surprise and delight, this goes well beyond the pulp mill.
“We’re really looking at making Gunns into a responsible company that has a proper social licence to operate.”
ABC Online:
Gunns investors exit after profit slump
A financial analyst says up to a quarter of Gunns’ shares have changed hands since the timber company announced its 98 per cent half-yearly profit tumble.
Last month the company revealed its profit after tax was $400,000, down from $33.6 million for the same time last year.
Matthew Torenius told ABC Local Radio 10 million Gunns’ shares were traded yesterday before the market opened.
“Since the announcement of the profit downgrade last month, we’ve probably seen 20 to 25 per cent of the shares change hands in the company,” he said.
“A lot of that is to and fro, and smaller players coming in and out, but there’s definitely been some quite large lines of stock being traded in Gunns.
“The major shareholders that were on the books at the time of that profit downgrade are very, very dirty at the way the whole profit downgrade was handled.”
“There’ve been a number of the institutions selling out of the stock.
“My gut feeling is, given the asset base of Gunns and the view from a number of punters, that the assets are worth more than where the stock’s trading at the moment.
“I wouldn’t be surprised to see some pretty heavy-hitting hedge funds starting to move up the registry,” he said.
Danielle McKay, Mercury:
GUNNS chairman John Gay has toppled off the nation’s richest executives list, mirroring the fortunes of his company.
It leaves Tasmania without a mention on the BRW executive rich list for 2010.
A tumultuous year of plummeting shares and failed deals has forced the controversial multi-millionaire from the top earners.
Mr Gay’s holding in Gunns has plunged to $6.7 million, a shadow of the $53.1 million that secured him 83rd spot on the list in 2008 and the $10.9 million that locked him in at 153 last year.
Accounting for part of Mr Gay’s loss was his controversial sale of 3.4 million Gunns shares for $3 million in early December.
The move outraged shareholders as he gained 90c a share, while yesterday the shares were trading at 55c. Mr Gay still holds more than 12 million shares, worth about $6.7 million.
Media magnate Rupert Murdoch topped the tally, which ranks Australia’s wealthiest 200 managers by the value of the shareholdings in their companies.
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