Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Bob McMahon

The Meaning of August 4

Gunns saw it coming. Thursday August 4 was the day the Gunns world was not about to end with a whimper … but with a bang.

With the survival instincts of the desperate toilet rodent, Gunns called a trading halt on the ASX using a bullshit excuse, the signing of the Heads of Agreement, to forestall the inevitable share price collapse below 20c.

A collateral benefit of calling a trading halt to forestall a share price collapse for reasons peculiar to the company itself, i.e. an unwillingness of shareholders to hold onto the toxic stock any longer, was that Gunns managed to avoid, in the short term, being drowned in the tsunami of blood sweeping the world’s stock exchanges overnight and the ASX today.

There was something else coming down the line and this may provide a sharper focus for the Gunns watchers in Tasmania.

My phone started ringing at 11am on Thursday. Some branches of the Tasmanian media had got hold of the strong rumour that Gunns was about to go into administration. An announcement was expected on Thursday afternoon, to that effect, it was presumed. Instead Gunns announced a trading halt and THE announcement deferred until Monday. Anyway, that is the presumption.

I was asked to make myself available for media interviews and to gather some TAP members around so that we could be filmed celebrating the collapse of the beast. I was disinclined to go down that road because the collapse of Gunns is going to cause a lot of pain to a lot of people, and not just pleasure for those who have opposed Gunns and their political backers hell bent on imposing a Soviet style state sponsored and taxpayer subsidised world scale resource extracting, economically doomed industry on Tasmania.

Out there in the bitter streets of our towns and in the divided back blocks where two competing fanaticisms are negotiating to ‘restructure’ the forest industry, there are an awful lot of people owed an awful lot of money by Gunns.

Who are these creditors? They are contractors, log truck drivers, family run forest enterprises, engineering companies, supply and service providers plus a huge number of private forest enterprises, tree growers, land owners with lease arrangements, earth moving businesses who according to media reports and anecdotal statements are owed money by Gunns. As are the people of Tasmania through its rogue proxy FT, which is owed between $15 – $25 million.

What is to happen to the Gunns creditors? Will they lose everything? This is an issue TAP has been examining for the past several weeks. We were provided with a legal opinion a couple of weeks ago and I will quote it in full. It comes with all the usual disclaimers and I claim no authorship.

“A creditor owed money by a company may issue a statutory demand pursuant to Section 459E of the Corporations Act where the debt owed exceeds $2000.

The statutory demand is usually prepared and issued by the solicitor acting for the creditor and is served on the company.

The demand must be supported by a copy of a Court judgement for the debt or if no judgement has been obtained by an affidavit setting out the details of the debt claimed.

The statutory demand gives the debtor company 21 days after service on the company to satisfy the debt.

Persuant to Section 459C a company is deemed to be insolvent if it fails to comply with a statutory demand.

In the event that the debt is not satisfied or arrangements agreed to for payment of the debt within 21 days the creditor may make application to the Court pursuant to Section 459P for a winding up order in respect of the debtor company.

Applications for winding up orders may be made in the Supreme Court and the Federal Court of Australia.

If the Court makes a winding up order a liquidator is appointed to take control of the company.

To invoke this process instruct a commercial lawyer with insolvency experience.”

TAP is currently contacting several legal firms in the mainland seeking advice on how best to advance the interests of the Gunns creditors. Ideally we would like to run advertisements providing Gunns creditors with legal contact(s) where they may lodge their COLLECTIVE statutory demands.

This comes at a time when Premier Lara Giddings is reported to be exercising herself on how to provide Gunns with the bulk and possibly all of the $43million forest industry ‘restructuring’ compensation package coming from the Feds. She is wondering how she might get away with it.

Given the massive body blow delivered to the Tasmanian economy and to the social fabric of Tasmania by the behaviour of Gunns, and even more significantly, by the collusion of state and federal politicians in propping up Gunns with huge subsidies and favoured legislative treatment, that the premier of Tasmania should consider stealing this money to give to Gunns is unconscionable.

We will be telling her so at the state Labor conference at the Country Club Casino on Saturday at midday and we’ll be telling the Prime Minister the same on Sunday at 9am.

• TAP to Blackflag the ALP State Conference.

WHERE: Launceston Country Club Casino
WHEN: August 6th at 12pm.

This is an opportunity for TAP to join in a big protest by unions, health and other public service workers and community organizations against the neo-liberal, fiscally incompetent, systemically corrupt and backward looking state government.

Tasmania has been called the Greece of Australia. Like the populace of Greece let us show this government that we reject their profligacy, mis-management and Don’t miss the TAP meeting this Thursdaytheir continued subsidy and propping up of the failed pulp industry.

• Health workers to protest

“ALP State Conference Protest Rally”

Members of the Health and Community Services Union (HACSU) and members of other public sector unions will tomorrow be having protest action at the ALP State conference.

Tasmania out of control, says Amos …

TASMANIA risks “withering and dying” because of a lack of vision from a State Government that has lost control to unelected boards and mob rule, a scathing report has found.

The report, compiled by former Labor MP Julian Amos, called for a major shake-up of Tasmania’s political structure and a change in attitude where change is embraced.

It criticised the repeated construction of a short-sighted vision by a Government that was lost in a “swamp of individual issues” and needed to take a broader perspective.

Dr Amos said immediate action was needed to revive Tasmania’s future, including doubling the population to one million by 2050, restoring the House of Assembly to 35 members, creating a Government vision for the state and reining in Government power from unelected and unaccountable boards.

Without change, Tasmania would become “a Georgian museum at the edge of the world,” Dr Amos said.

Full article in Mercury, HERE

Lennon pressures Greens:

PAUL Lennon has admitted his involvement in the forest peace deal, proving he is still a major Labor powerbroker three years after his resignation as premier.

Mr Lennon yesterday said he had been involved only on the periphery of the process until last year, when he was called on to help convince the forest industry to sign the Statement of Principles.

However, Mr Lennon, who “heavied” former Supreme Court judge Christopher Wright to rush Gunns’ pulp mill approval timelines, said the deal hinged on the actions of those still in power.

He said federal Greens leader Bob Brown and his deputy Christine Milne were responsible for the future of the landmark deal.

“It’s about time that the key players in the Greens, Bob Brown and Christine Milne in particular, showed some leadership and agreed to a compromise,” he said.

“Here we are now with well over half of the state wholly protected in parks and reserves and these people almost permanently residing in Canberra are no longer prepared to accept any responsibility for the economic hardship they’re causing by this ongoing [forestry] conflict.”

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16 Comments

16 Comments

  1. Barnaby Drake

    August 7, 2011 at 5:48 am

    7.I fear that there may be a cashed up Pulp Mill investor waiting in the wings.

    In this current market, if they are cashed up, then I suspect they will remain that way and not venture their money on a white elephant of this magnitude with such an uncertain future, especially as at the end of this month the planning permit lapses and there can be no sale without a ‘substantial start’ and that will require at least $30 million up front.

    Bankrupt companies cannot usually find this sort of capital!

  2. mike seabrook

    August 6, 2011 at 3:03 pm

    ref #6

    guess have had a first look at 30 june preliminary accounts

    guess that we will not get to see the 30 june 2011 accounts & see the prospect of an auditor fainting when he/ she is asked to sign off on them.

  3. Scott

    August 5, 2011 at 3:39 pm

    Jack 9.20am.

    I agree: that is an alarming prospect and one that has precedent in the pulp industry.

    Other pulp mills have gone through multiple changes of ownership as the original operator folds under the weight of the debt required to build the mill. With each successive change of ownership, environmental standards and maintenance are let slip little further and so on it goes…

  4. Karl Stevens

    August 5, 2011 at 2:41 pm

    D.I.Nicholas 9. Bass Strait will also be in ‘Dire Straits’ if Gunns gets their hands on $2.5 billion. It would be ‘Money for Nothing And Your Hicks For Free’.

  5. Jack

    August 5, 2011 at 1:20 pm

    Hey Scott,

    Perhaps just as likely and more worrying thought.

    If you were a potential investor why build it with Gunns? Then you have to share (profits, management etc).

    You’d just wait and see if they fall over or not. If they do, buy an approved mill, ready to go for next to nothing, no debt attached. Easy.

    Jack

  6. David Obendorf

    August 5, 2011 at 12:54 pm

    As Bob McMahon highlights: “…[as] two competing fanaticisms are negotiating to ‘restructure’ the forest industry, there are an awful lot of people owed an awful lot of money by Gunns”.

    It was a missed opportunity that Tasmanians allowed the ‘inexperienced’ to play with ‘old-timers’ in a negotiation for a forest ‘peace deal’. It was always just a process of wearing down your opposition and muddling up the priniciples – a ‘hard serve’ with a very poor ‘return of service’.

    These were always just the front-men – all men – in the Big Top tent doing the deals while real power resided in the outer tents where the levers were being pulled – FT, Gunns Ltd, Ta Ann, State Government.

    Some soul-searching is needed in ET, TWS, ACF and the Greens Party, I feel. Maybe it’s over to you, Senator Milne.

  7. Simon Warriner

    August 5, 2011 at 4:59 am

    Scotty, before a single cent was put up any prospective purchaser would want to do a new risk assesment from the seedlings on through. The one Gunns used has a very big rip in it. One about $2.3 billion dollars wide, by my estimation.

  8. D.I.Nicholas

    August 5, 2011 at 2:06 am

    Seems like Gunns motto is “money for nothing and whatever else we can get for free”.It is no wonder the state is in Dire Straits as Lara continues to cut essential services as she searches for even more funds for them.

  9. Robin Halton

    August 5, 2011 at 2:01 am

    At least PM Gillard is smart enough to fall for that old trick.
    Will Lara be so stupid to keep on raiding the piggy bank down at RBF on Sandy Bay Road to give Gunns our superannuation as a handout. Anything is possible now that Lennon is back guiding his little darling on ethical government procedures.

  10. Scott

    August 5, 2011 at 1:38 am

    I fear that there may be a cashed up Pulp Mill investor waiting in the wings.

    Putting up almost the whole $2.3 billion for a 49% share in a pulp mill isn’t good business. Buying the mill proposal in a fire sale from an administrator or receiver and then investing the same amount for 100% ownership of the project would be a much more attractive proposition.

  11. john hawkins

    August 5, 2011 at 1:36 am

    I suggest that Gunns will not come out of ASX suspension on Monday but will go straight into Recievership especially if the funds from Lara are not forthcoming.

    If the funds are forthcoming the money will go straight to the ANZ to pay down Gunns debt then Gunns will go into Recievership.

    The bank will have played its cards well in the circumstances and got the last bit of coursing blood out of the company.

    The Recievers will sell them up either way and those other than the banks, who hold a mortgage over the remaining land bank, will get a pittance; this will be the real sadness.

    If the Government is smart they will keep our money and deal with the Recievers this will stop Booth pulling the plug on Lara.

    It should be a far cheaper outcome for the Tasmanian taxpayer aka Lara and it will seriously annoy the banks.

    Iam not sure that Team Labor is that smart.

  12. Barnaby Drake

    August 5, 2011 at 12:31 am

    Here is the plan.

    Julia gives Lara $47 million to solve the 30 year forestry wars.

    Lara gives this money to Gunns on condition that they then transfers it to Forestry aginst their debt, which will save them from liquidation for at least another ten days.

    Forestry will use the money to reward the fat cats and see that some of them leave the industry and will pay a small portion of this to Treasury.

    Treasury will then give the money to Lara to loan to Aspen to buy a saw mill and Forestry will give them a new contract for wood supply from HCV forests.

    Aspen will sell the residue of their sawn timber to Triabunna Mill for wood chips.

    Gunns will state that this is a satisfactory outcome and will agree to the sale to Jan Cameron provided she processes the wood waste from this supply agreement and from the new Aspen Mill.

    Lara and Julia will declare it great outcome for the forests and an end to the forestry wars and a social licence for Gunns.

    Gunns will then try to use this as leverage to launch a new batch of shares on the market and go-it-alone, but with a little bit of help from the next round of subsidies.

    Julia will move onto the next issue of claiming all the money she has given to Tasmania back in the form of a carbon tax.

    Lara will then make protests illegal and we shall all live happily ever after.

    End of story.

  13. john hayward

    August 4, 2011 at 10:09 pm

    You may just as profitably accuse an eel of having bad breath as telling Lara that her behaviour is “unconscionable”.

    Tasmanians just need to throw the bastards out.

    John Hayward

  14. Lake Pedder

    August 4, 2011 at 10:07 pm

    Editor’s note: comment deleted legal and one-persona provision – please see TT code http://oldtt.pixelkey.biz/index.php/pages/legalbits points 5 and “Some legal red flags” point 2

  15. PB

    August 4, 2011 at 7:00 pm

    It would appear that Gunns has cynically manipulated an equally deficient ASX into agreeing to its request for an extremely timely trading halt on false premises.

    No doubt Gunns will be using this time to frantically lobby both the Federal and State Governments for a multi-million dollar rescue package to save it from (albeit temporary) insolvency.

    It almost defies belief that the Premier and Treasurer of this State would even contemplate “compensating” Gunns when it lies on the precipice of bankruptcy, has no legal grounds to stand on and is acting in the same criminal manner as the mafia.

  16. Dave Groves

    August 4, 2011 at 5:07 pm

    I feel for those contractors, but the most likely scenario if gunns goes under, from lack of diversion of public monies via our astute pollies, is that they will get bugger all.

    Tax man heads the queue, then the banks, then whoever is the one that paid for the action gets next billing…..how much do you think he/she would get…then everyone else gets a sniff of the repo trucks fumes as it wheels past.

    Meanwhile there will be a passenger flying overheard bound for the warm beaches of Noosa…”such is life” said a man once….

    For our leaders to want to piss our hard earned into the Gunns bonfire beggars belief and when you think that they will rip this money from our hospitals…..good god…someone has the wood on someone…

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