Tasmanian Times

Economy

Gunns Limited Announces Sale Of Hardware Retail Business

7:59pm EDT
Gunns Limited announced that it has entered into an agreement to sell its Hardware Retail business to Blue Mountains Hardware Pty Ltd, a wholly owned subsidiary of John Danks & Son Pty Ltd (Danks), for an amount of $40 million subject to completion adjustments. The sale is a conclusion to a competitive bid process which evaluated offers from various parties. The transaction involves the sale of the entire Gunns Hardware Retail business in Tasmania and the transfer of all its employees. The sale is expected to complete on May 31, 2010.

Read more HERE

Earlier on Tasmanian Times, John Hawkins: It was so …

(Andrew Main, The Australian: Not so great Gunns …)

IF Gunns Ltd was a start-up company, the analysts wouldn’t be looking at it.

Yesterday’s $40 million deal with the Lowe’s-Woolies-owned hardware outfit Danks & Son is clearly a constructive development for the buyer and particularly for the 283 affected employees but the vendor’s market capitalisation is now around the $285m level. Shares in what was once Australia’s all-powerful timber giant closed unchanged at 35c yesterday as market watchers mostly changed the subject when the topic of Gunns came up.

It’s hardly surprising since the planned $2 billion Tamar River pulp mill is now disappearing over the horizon of the timber group’s plans, thanks to the enormous and unfashionable leverage that would now be required to finance it. News from the bunker is sparse and most reports on the company highlight litigation funder IMF’s class action, managed by Maurice Blackburn Cashman, alleging Gunns breached its continuous disclosure obligations earlier this year.

Gunns reported a 98.7 per cent profit drop in the half year to December 31, 2009, and the class action alleges the company failed to make the market aware of its deteriorating financial position.

To give you an idea of how well the company is travelling, that news in February knocked the share price down by 22 per cent from 88c to what seemed like a low 68c. Now it’s just over half that.

From, HERE

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15 Comments

15 Comments

  1. Concerned Resident

    May 25, 2010 at 4:34 pm

    I am like minded to many of the above and refuse to shop at Gunns. My son and I went to Bunnings to get some wood for something and we made the comment that we wouldn’t go to Gunns for anything. The guy who was serving us told us that all their wood is supplied by , believe it or not, Gunns. Seems it is impossible to not support them even though we don’t want to.

  2. Disturbed Voter

    May 25, 2010 at 2:06 am

    God! I looked at the GNS ASX listing this evening – 41,200,000 shares traded today! Gunns finished at 26.5c, that’s almost 25% down TODAY! I REALLY hope my super fund has no Gunns shares. I suppose they could be used to light the home fire…

  3. John Day

    May 24, 2010 at 11:20 pm

    I can not believe that no employees will be adversely effected.In Launceston alone there are two sets of management teams, administration, purchasing, receiving and delivery staff etc.

  4. Russell

    May 24, 2010 at 9:48 pm

    Re #12
    Lol, I’ve got it as my homepage.

    26.5c (was as low as 26c), almost a 25% drop today.

    At the same time, read this spin released today by Gunns (Greg L’estrange) which they try to justify a drop in woodchip price as some weird FSC trade-off with Japan: http://www.asx.com.au/asxpdf/20100525/pdf/31qhx3hwn06x4g.pdf

    I’m not completely clear about it but I think it means Gunns is desperately trying to get rid of the huge woodchip stockpiles. How any of these could pass as FSC is beyond me.

  5. Disturbed Voter

    May 24, 2010 at 6:22 pm

    29.5c!! Will it, can it go lower I wonder…
    Oh, wait! 28.0c and still falling!

  6. Russell

    May 24, 2010 at 2:06 pm

    Re #9
    Hi Charles. I think Danks/Woolworths, or whichever of a number of names floated in this takeover that they will be trading under, will seek the cheapest and most reliable supplier they can find be it here or from overseas. Overseas (probably Indonesia) will probably win out.

    Woolworths has a history of screwing whoever for whatever they can get. I doubt Gunns has the capacity or the business nous to supply timber competitively and run at a profit as evidenced to date.

    Also, I’m totally against any “contractor bailout.” It hasn’t happened in any other industry, it shouldn’t happen in this case either.

    Contracts are contracts. When they run out they are finished. When one party prematurely brings it to an end, it is liable to fulfil its contractual obligations to the other party or compensate. Nothing to do with anyone else. It’s between Gunns and their contractors, no-one else.

  7. Factfinder

    May 24, 2010 at 5:17 am

    The Australian – Andrew Main – ‎1 hour ago‎
    IF Gunns Ltd was a start-up company, the analysts wouldn’t be looking at it.

    Not so great Gunns

    IF Gunns Ltd was a start-up company, the analysts wouldn’t be looking at it.

    Yesterday’s $40 million deal with the Lowe’s-Woolies-owned hardware outfit Danks & Son is clearly a constructive development for the buyer and particularly for the 283 affected employees but the vendor’s market capitalisation is now around the $285m level. Shares in what was once Australia’s all-powerful timber giant closed unchanged at 35c yesterday as market watchers mostly changed the subject when the topic of Gunns came up.

    It’s hardly surprising since the planned $2 billion Tamar River pulp mill is now disappearing over the horizon of the timber group’s plans, thanks to the enormous and unfashionable leverage that would now be required to finance it. News from the bunker is sparse and most reports on the company highlight litigation funder IMF’s class action, managed by Maurice Blackburn Cashman, alleging Gunns breached its continuous disclosure obligations earlier this year.

    Gunns reported a 98.7 per cent profit drop in the half year to December 31, 2009, and the class action alleges the company failed to make the market aware of its deteriorating financial position.

    To give you an idea of how well the company is travelling, that news in February knocked the share price down by 22 per cent from 88c to what seemed like a low 68c. Now it’s just over half that.

    http://www.theaustralian.com.au/business/city-beat/no-ruddy-tax-on-citadel-resources-planned-saudi-mine/story-e6frg9no-1225870751885

  8. Charles Gilmour

    May 24, 2010 at 1:03 am

    Consider this …. As per the Mercury … “This is an important strategic transaction between Gunns and Danks,” Gunns chief executive officer Greg L’Estrange said. “Gunns has divested a non-core business to a group… with whom we plan to have a long term relationship as a timber supplier.”

    What timber, publicly owned native forest and/or plantations?

    Where does this leave at least part of the wood supply deal between Forestry Tasmania and Gunns? Who is going to reap the benefits? Will FT still cheaply sell the timber to Gunns so they (Gunns) can continue to reap the benefits of the mark-up to a third party at the expense of a public resource?

    FT gives a license to trash (clearfell, burn, smoke-out, poison) the states forest, Gunns takes it and says yay, wasn’t that cheap and easy and lucrative, and a new company sells it. So where does the trashing of the environment stop? Where does the public get a good competitive price for the states forests and an increase in royalty from Gunns? when Gunns have already brought down other community sawmills?

    Obviously the round table conference must include as point one on the agenda … every single contract, agreement, wood supply arrangement, the RFA, sweetheart deals, management contracts, pricing arrangements etc etc must all be cancelled, reviewed and renewed to show some form of transparency, sustainability and accountability.

    So after selling their cash flow businesses, where does Gunns get their cash flow from now? They are not selling woodchips on a regular basis, the free MIS money has ceased, and their subsidies should have ceased?

    It will be very interesting to see if their vineyard sells and for what, but more importantly how long it will take to sell their vineyard given it’s location across the river from the proposed pulp mill.

    Just as an aside, essentially Gunns and FEA and the like have used FT employees to build their roads, do their surveying, mapping etc, essentially for a loss, and accordingly they have contracted logging people, machinery etc in an endeavour to make a profit for themselves and their shareholders. As this scenario goes belly up, why then can’t these ASX listed companies be forced to contribute some of their ‘super’ profits back to the industry they have pillaged?

    In other words, why does the taxpayer have to bail out contractors and other people just because a public listed company puts it’s hand up and says I’ve failed? … Make them feel some pain too. Therefore can’t some of this $40 million go into the logging contractors bail out fund? Isn’t it the likes of Gunns etc responsibility?

  9. Mike Adams

    May 23, 2010 at 11:16 pm

    Danks have also bought Becks. Gay’s revenge?

    Let’s hope Becks’ staff have the same’offers’.

  10. Russell

    May 23, 2010 at 10:31 pm

    LOL, me too.

    A wonderful result for the employees.

  11. john hawkins

    May 23, 2010 at 10:03 pm

    Is it odd that no joint announcement was made to the ASX on the sale of Gunns Hardware stores, perhaps they could not agree on the wording.
    Danks in their press release state that they,’have purchased five hardware stores in Tasmania one timber joinery centre one truss manufacturing plant and a support office’….they will,’make offers to continue the employment of 283 former Gunns staff’.
    Gunns merely notes that it has divested itself of a non core business and that,’the transaction involves the retention of all employees at all of the retail sites’ which is not quite the same as ‘make offers’.

  12. Leah B

    May 23, 2010 at 9:28 pm

    This will please my hubby, I had banned him from shopping at Gunns and he used to moan about the driving distance to Bunnings.

  13. Mike Adams

    May 23, 2010 at 8:57 pm

    Danks should immediately commission a car sticker, ‘You no longer shop @ Gunns.’

    And Jack Nimble, I always found Beck’s closer and better.

  14. Mike

    May 23, 2010 at 7:49 pm

    Excellent, now they only owe $610 million.

  15. Jack Nimble

    May 23, 2010 at 5:29 pm

    Fantastic, now i won’t have to drive all the way to Bunnings to get my hardware.

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