Kiwi billionaire linked to Gunns

Dashing Kiwi-born billionaire Richard Chandler looks to be troubled Tasmanian timber company Gunns Limited’s white knight, with the now Singapore-based businessman set to emerge as a cornerstone investor in the controversial group.

It is understood that Chandler, worth a reported $US4 billion, is poised to take a stake in Gunns, whose shares were placed in a trading halt yesterday.

The halt was pending news of what the company said was a private placement and equity raising, details of which were still being finalised last night.

The company is believed to be in final talks with Chandler’s Richard Chandler Corporation towards the private investment group taking a 25 per cent to 40 per cent stake in the timber company.

The Launceston-based group is understood to be seeking to raise between $250 million and $350 million in fresh equity, which would help erase a significant portion of its $580 million debt.

This amount does not include the company’s Forests Hybrid notes, which have a face value of $120 million.

Gunns last week was granted an extension to its core $340 million lending facility by its group of 10 lenders, including the ANZ Bank.

An extraordinary general meeting will likely be held in April to allow shareholders to vote on the removal of the 20 per cent shareholder cap to then allow the new cornerstone investor to come onto the share register.

Chandler, who is one of Singapore’s richest individuals, has invested in a wide range of industries including telecommunications, power, steel, banking and energy.

He has a reputation for buying into and shaking things up at undervalued companies and working towards a re-rating of the stock, which would be a big win for long-suffering Gunns investors.

He is believed to have approached Gunns before Christmas.

Chandler is the biggest shareholder in Canadian forestry group Sino-Forests.

• Lucy Landon-Lane, Pulp The Mill: The message for Mr Chandler

Today there is speculation regarding Gunns’ potential involvement with New Zealand billionaire Richard Chandler, pending an announcement by Gunns tomorrow.

Richard Chandler is a major shareholder in Sino-Forest, a Chinese-Canadian company whose principle businesses include the ownership and management of plantations; sale of standing timber and logs; and manufacturing of wood products.

Sino-Forest is currently facing charges of fraud in Canada, and is being investigated by Canadian authorities. Its shares fell more than 70% after these allegations were laid and the company has been placed in a trading ban having lost most of its value, and the company is teetering on bankruptcy.

A class action was lodged against Sino-Forest last week in the Supreme Court of the State of New York. The company’s founder and Chief Executive stepped down amid the investigations of fraud.

Spokesperson for Pulp the Mill, Lucy Landon-Lane said, “The media today have been running a story, no doubt helpfully leaked by Gunns, that Richard Chandler has a reputation for buying into and shaking things up at undervalued companies and working towards a re-rating of the stock…” [ ]

“The Sino-Forest experience tells a very different story. Mr Chandler’s investment in Sino-Forest was widely viewed as a very big bet in a company riven by corporate governance issues and poor performance. It was a bet that didn’t pay off.”

Ms Landon Lane said, “The Tamar Valley community has a simple message for Mr Chandler – don’t bet on Gunns as you will lose just as you did with Sino Forest. The parallels between the companies Gunns and Sino-Forest are all in the negatives, not the positives. Gunns too is facing a class action, and legal action to challenge the validity of the pulp mill permits, handed down through a corrupt assessment process.”

“There is no social licence for Gunns’ sole remaining “asset” the Tamar Valley pulp mill, and it will face continued community opposition and protest until it dies. An investment in Gunns is as bad a deal as the investment in Sino-Forest.”