Tasmanian Times

David Obendorf

Never say die, until you have to! Shareholders want help for Gunns

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Marius Kloppers

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Greg LeStrange

For big development in Australia to succeed – be it a pulp pill in northern Tasmania, a uranium mine in the South Australian desert or LNG or coal port infrastructure in WA and Queensland – the bottom line is always [i]money[/i].

When [b]Marius Kloppers[/b], the CEO of [i]BHP-Billiton[/i] pulled out of the $28.7 Billion expansion of its Olympic Dam uranium mine last week he said this to say:

“This decision is almost wholly associated with, in the first instance, capital costs.”

He said the high cost of development in Australia, magnified by the high Australian dollar, was the primary cause of BHP-Billiton’s decision to shelve the expansion.

“What happens if you build something while those conditions are in place is effectivelyyou lock in the economics of the project in an unfavourable way.”

Mr Kloppers also blamed last year’s Fukushima nuclear disaster in Japan for softeninguranium demand and prices.

And BHP-Billiton is a huge multi-national; corporation with market capitalisation in the $US100’s of Billions.

Now indulge me in futuristic plagiarism.

When [b]Greg L’Estrange[/b], the CEO of [i]Gunns[/i] pulled out of the $2.4 Billion development of its Tamar Valley pulp mill this week he said this to say:

“This decision is almost wholly associated with, in the first instance, capital costs.”

He said the high cost of development in Australia, magnified by the high Australian dollar, was the primary cause of Gunns’ decision abandon the project.

“What happens if you build something while those conditions are in place is effectively you lock in the economics of the project in an unfavourable way.”

Mr L’Estrange also blamed the downturn in pulp demand and softening prices from its potential customers in Japan.

And Gunns Ltd is an indebted ASX-listed company that has been in a share-trading halt since March 2012. It’s market capital capitalisation is now in the low $100’s of millions and is unlikely to trade again.

• Alison Andrews, The Examiner: Shareholders urge Gunns help

A NEW national group of hybrid shareholders in forest company Gunns has written to Premier Lara Giddings urging her to help ensure the viability of the company.
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Spokesman for the NSW-based group Gaby Berger said that he had sent the same letter yesterday to media outlets, other politicians and banks in a call for support for Gunns at a critical time for the company.

He had not yet received a reply from Ms Giddings.

Mr Berger said that Forests Investor Group Supporters, or FIGS, had become increasingly alarmed at media speculation that a group of hedge funds was about to put Gunns into liquidation.

“This would lead to devastating job losses and a wipeout for investors,” Mr Berger said.

Read the rest, The Examiner here

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13 Comments

13 Comments

  1. Russell

    August 29, 2012 at 11:53 am

    Re #12
    What would that mean? Are FORESTS’ shares being used to prop up Gunns for a little longer? Are FORESTS’ shareholders being used to feed the vultures?

  2. Factfinder

    August 28, 2012 at 11:48 pm

  3. Russell

    August 28, 2012 at 12:43 pm

    I smell something very rotten, especially straight after Burke and Green has had to intervene.

  4. Tim Thorne

    August 28, 2012 at 2:13 am

    So now let’s hear it clearly from the Liberal politicians: “We want a pulp mill in the Tamar Valley and if elected to government we will make sure there is one, no matter what the cost to taxpayers.”

  5. David Obendorf

    August 28, 2012 at 12:07 am

    According to Forest Investors Group Supporters [FIGS] the hedge funds are moving on Gunns Ltd. and are posed to put them into liquidation.

    Would that not suggest the hedge fund consortium already have a controlling influence in the company? How do these corporate raiders operate in these circumstances?

    Also according The Examiner’s chief reporter, Alison Andrews, the full-year results for Gunns Ltd are due at the end of this week. It could be an interesting report!

  6. David Obendorf

    August 27, 2012 at 9:27 pm

    I never thought I’d see the day at the FT Comunications spin doctor/director for Forestry Tasmania would become a known whistleblower via a rather explicit email critical to the government and the responsible Minister.

    After nearly a decade of being on the government pay roll, for Ken to tell his FT troops that Bryan was ‘rolled’ in Cabinet suggests Ken is really, really upset at this double-cross from Mr Green.

    A ugly look for Bryan Green, Forestry Tasmanian and this Government,

  7. john Hayward

    August 27, 2012 at 9:22 pm

    The leak sounds better planned than most FT operations.

    The big questions are what they mean by “commercial” section, and how they are going to launder their money without their claimed enormous “service obligations”.

    John Hayward

  8. Pilko

    August 27, 2012 at 9:09 pm

    This weeks Darwin award goes to Forestry Tasmania (a GBE that loses 8 figure sums every year) spin doctor Ken Jeffreys.
    Responding to what he described as the “public execution of Forestry Tasmania” by appointing a new board, Jeffreys complained- “that suggests there is something wrong with the current board”.
    Fcuk me Ken. No way! You keep losing our money tiger. We dont mind. The financial geniuses on the current board are doing a great job!

  9. TV Resident

    August 27, 2012 at 8:56 pm

    I believe this is just ‘sour grapes’ from Ken Jeffreys because he wasn’t the controller of this gov’t decision. Obviously the gov’t and the Greens discussed this at length along with URS forestry and decided that this is the most sensible option considering that FT are totally incapable of making any profit on the FREE timber that they had donated to them, from PUBLICLY OWNED forests, by previous pliable gov’t leaders.

  10. Pete Godfrey

    August 27, 2012 at 8:53 pm

    Forestry Tasmania should be ecstatic about the latest development. It will free them to concentrate on supplying logs and managing forests.
    All the dastardly Community Service Obligations that have caused them so much angst in the past will now be out of their hands.
    They can now get on with restructuring and re imaging themselves as a sustainable forest manager.
    It may be that a lot of dead wood needs to be trimmed first, mostly the branches at the tip of the tree that have been sucking the life out of the GBE for so long.

  11. Garry Stannus

    August 27, 2012 at 8:43 pm

    ! Trouble is, the whole forestry edifice is imploding while the government is not offering a vision for the future. And the Opposition as a Government would be a regressive step. Like hitting the

  12. RJ Peak

    August 27, 2012 at 7:37 pm

    Re FT: The split doesn’t go nearly far enough but is likely to be as much sanity in the management of the state’s forestry industry as we’ll see, if indeed it eventuates at all. FT, soulless creature that it is, it like the undead, extremely difficult to kill, and I wonder if the present government really has the will and the strength to drive the requisite stake (E. nitens, of course) through its heart. Then the Liberals will assume government at the next election and put it back together again–we shift from Count Dracula to Dr Frankenstein’s monster.

  13. Peter Brenner

    August 27, 2012 at 7:27 pm

    You can split FT into 24 or 437. It is all meaningless if the underpinning policies are not rewritten: Genuine tripple bottom line, which in Tasmania means prioritising the ecological component which then assured a continuous wood supply togther with intact ecosystems. That in turn leads to jobs a prosperous timber economy and the assurance of biodiversity along with guaranteed quality water supplies.

    In order to do that FT would need to reduce its acitivities to supervised damage control until the new directions are set up in law.

    Horse before cart, not mucking around with painting the spokes!

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