What company has received $500 million in cash from the issue of new shares over the past 3 years but only has a market value of $300 million?
Why Gunns of course.
What company, when faced with the daunting prospect of repaying or renegotiating almost all its borrowings of $600 million within 12 months, pretends that the announced sale of all assets is to finance a new pulp mill rather than to enable the solvency declaration to be signed?
What company, having announced the sale of all assets, will be forced to publicly reveal in its annual accounts the write down of the values to reflect current market offers rather than pie-in-the sky expectations?
What unprofitable company, whose operations have been sold, about to be sold or closed down, can still claim ‘underlying profit’ of $40 to $50 million?
What company, operating in the native forest sector with decrepit assets and diminishing markets, is demanding compensation for a cessation of its loss-making activities?
What company failed to foresee the decline in global demand for native forest woodchips, yet nevertheless books income from plantations not due for 6 years as current year income?
What company brazenly tells the market that it is confident of gaining finance of $2.5 billion without a joint venture partner – but is yet to reveal the new business case despite adverse exchange rate movements, the proposed sale of all forestry assets and the plummeting market assessment of its assets?
What company has not bothered to explain a material matter as to how second and third rotation tree crops needed as feedstock for a pulp mill, will be arranged and financed now that MIS schemes are defunct and plantation land about to be sold?
That’s right, Gunns, in every case.
This company is in its death throes yet continues to delude itself and the market and the Australian public that it has a future.
And perhaps it has, if Government bails it out.
For that is the only way forward for Gunns.
Institutions are wary of bold new developments at the best of times, let alone a proposal from a teetering company with no experience in the operations of a high-tech, supposed state-of-the-art pulp mill.
Institutions once provided the stability, the authority, the credibility and most importantly most of the cash that has allowed Gunns to survive.
But Gunns has slipped out of the Top 200 on the ASX charts and institutional interest is waning.
The current share register now more closely resembles a hotel register of a 2-star private hotel.
Gone are the long-term boarders.
It’s the itinerants who only stay a night or two whose names continually appear on the register.
Here one day gone the next.
Similar to the politicians who have overseen this farce … Paul Lennon and David Bartlett.
With change comes hope. When Lara Giddings accepted the poisoned chalice as Premier, hopes were raised that someone would at last recognise that rebuilding a new Tasmanian economy on the foundations of an almost insolvent entity was not necessarily a prudent plan.
Alas Ms Giddings still sees Gunns’ pulp mill as the shining beacon, guiding the State forward.
Unfortunately most advice on forestry matters has come from the Government-owned Forestry Tasmania, now hopelessly conflicted and closer to insolvency even than Gunns. The advice from that source is unlikely to be impartial.
It took the State Government forever to realise that it might need to be a little more proactive, so it has recently called tenders to provide advice via a Strategic Review.
For years Forestry Tasmania, entrusted with the care of the State’s native forests, has conspired with Gunns to split the proceeds of woodchipping in proportions that favoured the latter.
But now both are facing a bleak insolvent future, and are accusing the other of price undercutting as they play leapfrog in the race to the bottom.
Only when that inevitable destination is reached will Tasmania be able to move forward.
John Lawrence was employed as an economist for five years before returning to Tasmania where working life has been spent as an accountant in public practice and an observer and researcher on finance and economic matters at the State level.
• Kim Booth: Forestry Contractors Agree With Kim Booth MP That the Native Forestry Industry Has No Future Without Substantial Restructure
FORESTRY CONTRACTOR STANDS WITH BOOTH
Forestry Contractors Agree With Kim Booth MP That the Native Forestry Industry Has No Future Without Substantial Restructure
Kim Booth MP
Greens Forestry spokesperson
Thursday, 9 June 2011
The Tasmanian Greens today congratulated Mr Charlie Davis for having the courage to stand up and represent the interests of the silent majority of the native forestry industry, and Mr Davis is standing alongside Kim Booth MP to demand that that the State and Federal Forestry Ministers help him and his fellow workers exit the industry with dignity.
Greens Forestry spokesperson Kim Booth MP, said the fact 83 out of a 120 forestry contractors put their hands up to get a buy-out in the recently botched federally funded Tasmanian Forest Contractors Exit Assistance Program, is clear evidence that the Tasmanian native forestry industry does not have a future.
“Almost 100% of those working at the coalface of the native forestry industry put their hands up to get out. That number is an indisputable indication of an industry without future,” said Mr Booth.
“I have argued for years that the current Tasmanian native forestry logging is uneconomic and unviable. The markets don’t want it, the Tasmanian community don’t want it and now even the people that work in it can’t make a decent wage in it.”
“The Greens tabled a motion in Parliament on the 26 May 2011, noting that the extreme financial stress placed on forest workers and contractors demanded that the State and Federal Ministers step up to the plate and secure an industry support package that enables contractors to exit the industry permanently, whilst placing their contracted volume or quota into conservation reserves.”
“Time after time, contractors have been driven further into debt and only given lifelines to hang on to. Contractors are being left to cover mortgages and the loss of life savings whilst Gunns Ltd is running to Canberra crying poor and Forestry Tasmania just goes knocking on the Department’s door for more money.”
“Today I stand here with Mr Charlie Davis and call on the Labor and Liberal parties to support my Motion in Parliament so that these men and women can exit the forestry industry with dignity, and have the capacity to keep putting their practical skills to good use in the Tasmanian community” said Mr Booth.
Text of the Motion:
522 Mr Booth to move—That the House:—
(1) Notes with grave concern the financial stress placed on forest workers and contractors as a result of the collapse of the forest industry.
(2) Further notes:—
(a) the collapse is due to the financial unviability of the native forest industry;
(b) the unit cost of production is too high in Tasmania; and
(c) the industry cannot survive in its current form.
(3) Calls on the State and Federal Governments to recognise the financial unviability of the industry, and work together to secure an industry support package that enables contractors to exit the industry permanently, and which also places their contracted volume or quota into conservation reserves. (26 May 2011)
9th June 2011
•Environment Groups call on Liberal Party to Act in the Interests of All Tasmanians
Environment groups today called on the State Liberal Party to stop playing politics and support the current forest process by a direct protest at the office of the Leader of the Opposition Will Hodgman.
Scott Jordan from the Tarkine Nation Coalition said “It is time for the State Liberal Party to stop being the wreckers and accept that both ENGOs and the broader forest industry both want protection for the environment and a long term sustainable timber industry.”
“The continued public degrading of the process and attacks on parties to the Statement of Principles by members of the Liberal Party is not constructive and clearly demonstrates that they have little regard for the future of Tasmania, Tasmanian workers, Tasmanian communities or Tasmania’s unique environment” he said
“Tasmanian communities, including the towns along the north-west coast will benefit from the protection of Tasmania’s forests. It is time that the Liberal Party showed the coast that it supported local communities and workers” concluded Mr Jordan.
“As signatories work to deliver a forest agreement, we call on all parties — including the State Liberal Party — to work in the interests of all Tasmanians and support this effort to secure environmental protection and transition to a sustainable timber industry.” said Dr Phil Pullinger Director of Environment Tasmania.
This action was supported by ET member groups, Florentine Protection Society, Nature Photographers Tasmania, West Wellington Protection Group.
Environment Tasmania Inc.
The Conservation Council