Greg L’Estrange: He’s done an enormous job
Gunns $400m recapitalisation puts mill on line
GUNNS has pulled back from the brink after a two-month suspension from the stock exchange. The Tasmanian forestry company is believed to have won the backing of institutional shareholders for a $400 million-plus recapitalisation, which will allow it to pay down debt, realise the value of its plantation estate and develop its controversial pulp mill without an equity partner.
One fund manager who is substantial in the stock, speaking off the record, said Gunns’s main problem had been its stretched balance sheet, and there was ”huge value in the company” not reflected in its share price.
Gunns was suspended from trade at 16¢ on March 9 after New Zealand billionaire Richard Chandler withdrew from a $150 million recapitalisation. The company had net tangible asset backing of 88¢ a share at the end of last year.
The fund manager said Gunns could not realise the value of its assets, including a 150,000-hectare plantation estate, with its bankers at the door.
Gunns, which now has a market capitalisation of $136 million, owes more than $550 million, including a $340 million syndicated facility with banks including ANZ, which expires at the end of the year but must be paid down progressively. Institutional shareholders are believed to accept Gunns capital raising is needed, whether or not it leads to successful development of the $2.3 billion bleached kraft pulp mill at Bell Bay, in the Tamar Valley.
But if Gunns pulls out of the project it will be forced to write-off capital costs of $232 million as at December 31. Industry analysts say Gunns’s pulp mill would be internationally competitive notwithstanding a high dollar, and rival hardwood pulp mill developments coming online in Latin America and China.
Gunns’s chief executive, Greg L’Estrange, whose contract expires in July, was overseas meeting investors this week and would not comment on the capital raising but has told BusinessDay the pulp mill was in the top quartile of cost-competitiveness worldwide.
”It’s competitive at [an exchange rate of] $1.05,” he said. ”It’s the only manufacturing project in Australia, let alone Tasmania.”
Gunns will resume trading on release of the capital-raising documents, including a prospectus for retail investors. The fund manager said if Mr L’Estrange was able to finalise the recapitalisation he had ”done what’s required. He’s done an enormous job”.
Read more: http://www.smh.com.au/business/gunns-400m-recapitalisation-puts-mill-on-line-20120504-1y460.html#ixzz1u4GDLhr2
First published: 2012-05-05 05:40 AM
• SMH, Wednesday, May 9: New life ahead for zombie Gunns, HERE: It is no surprise that Tasmanian forestry business Gunns still wants to build its $2.3 billion pulp mill at Bell Bay in the Tamar Valley. What is surprising is that anyone wants to fund it. Yet as BusinessDay reported on the weekend, a handful of key institutional shareholders are poised to do just that, backing a circa $400 million capital raising to stave off Gunns’ bankers and get the project moving along without an equity partner. Good money after bad? Not the way the instos see it. Gunns current share price – 16 cents, where it was suspended on March 9 – puts them in a difficult situation. The company’s reported asset backing is 88 cents a share and while there may be a degree of scepticism about that number, key fund managers believe the share price does not reflect anything like the value of Gunns’ 150,000-hectare hardwood plantation estate, let alone ascribe any value to the pulp mill project which has all necessary approvals.
• On TT: John Lawrence and the Zombie
• Thursday, May 10: Protest at Ta Ann timber vessel in Tasmania
This morning, two protesters have conducted a peaceful demonstration against the timber company Ta Ann, at Hobart wharf in Tasmania.
Two protesters have entered the wharf and have boarded the vessel,
“Our protest today is to demonstrate our opposition to the ongoing logging of Tasmania’s world heritage value forests for Ta Ann,” Huon Valley Environment Centre’s Jenny Weber said.
• Two protesters were arrested, ABC Radio reports.
• Media Update
10 May 2012
Two Tasmanian Forest Protesters released
Two Tasmanian forest protesters have been released on bail this afternoon after their appearance in the Hobart Magistrates court following a protest at the Hobart wharf. Rhiannon Curtis and Rosie Phillips will reappear in court in on 5 July 2012.
Huon Valley Environment Centre conducted the protest today to demonstrate our opposition to the ongoing logging of world heritage value forests for Ta Ann.
• SENATOR THE HON RICHARD COLBECK
Senator for Tasmania
Shadow Parliamentary Secretary for Fisheries and Forestry
Shadow Parliamentary Secretary for Innovation, Industry and Science
M E D I A R E L E A S E
10 May 2012
Bob Brown votes against his own opinion on forest regeneration
Former Australian Greens leader Senator Bob Brown has today voted against his own opinion on forest regeneration.
Senator Brown joined other Australian Greens Senators to reject a motion which mirrored his very own opinions as printed in The Mercury on April 22.
The motion from Coalition Forestry Spokesman Richard Colbeck asked that the Senate recognise that logged Tasmanian forests have the potential to recover quickly and that rich biodiversity can exist in areas once logged.
“My motion was based very closely on the words of former Greens leader Bob Brown, as printed in a Tasmanian newspaper last month,” Senator Colbeck said.
“After decades of disagreeing with his views about forestry, I was delighted to read Senator Brown’s acknowledgement that harvested areas of forest had the potential to recover quickly and provide rich biodiversity.
“Senator Brown spoke the truth in his newspaper comments – harvested forests do have great potential to recover quickly and they can continue to be home to biologically diverse flora and fauna. Such recovery is testament to the excellent management work carried out by Tasmania’s forest workers.
“Professional foresters also tell us that native forest management provides the values that environmentalist claim to aspire to.
“In addition, both the Intergovernmental Panel on Climate Change and the UN’s Food and Agriculture Organisation recognise that sustainable management of forests, including a mix of conservation and timber harvest, is optimal for carbon reduction.
“But today I’m as disappointed as ever in Senator Brown for backing away from his very own words, under pressure from his Senate colleagues.
“Today’s back-flip is at odds with the recent tributes to Senator Brown as man of conviction who is not afraid to disagree with those around him,” Senator Colbeck said.
And,
10 May 2012
Protestors demonstrate why forest talks are a sham
Green groups protesting in Hobart today have again proven they are impossible to negotiate with, and that the Tasmanian Intergovernmental Agreement (IGA) negotiations are a sham, Coalition Forestry Spokesman Senator Colbeck said.
“Even as negotiations are underway on a durability clause for the agreement, protesters again prove the inherent weakness of this process,” Senator Colbeck said.
“If the State and Federal Governments believe that an enduring peace can be achieved for Tasmania’s forests from this sham process then more fool them. Green groups are not interested in a deal.
“The reality is that the green incremental approach to financially strangling and shutting down the forest industry will continue.
“Today’s protest activity against Ta Ann Tasmania shows that clearly.
“Despite the “peace talks”, today we have again seen a legitimate forestry business – one which is using legitimately sourced, independently certified timber to create jobs and revenue for Tasmania – targeted by environment groups hell-bent on wiping out the industry entirely.
“Premier Lara Giddings promised the forest industry that she would honour timber supply contracts, and she cannot renege on this.
“The reports coming from the IGA process show that locking up any further forest would mean that those contracts cannot be met.
“Peak environmental groups know this. They claim they cannot control other protesters but the ongoing market disruptions and protest activities certainly appear part of a coordinated campaign,” Senator Colbeck said.
