Economy
The Gunns have fallen silent. Anchorage Capital profits at Tasmanians’ expense
The Gunns have finally fallen silent on Anzac Day in a dramatic conclusion to this long running saga.
Friday’s Australian notes that the assets of the 139 year old company have been sold for $330 million for 175,680 hectares of freehold land, 96,850 hectares of plantation gumtrees on other people’s land and 3780 hectares of pines.
The pulp mill permits for which the Tasmanian Parliament was recalled remain unsold.
The creator of this disaster – one John Gay, now a self-confessed criminal – has lost well over 2 billion dollars of other people’s money.
He has kept – thanks to the Tasmanian legal system – the majority of his gains from insider trading.
Well done Tasmania’s legal eagles and pollies … you are well and truly open for business.
It is difficult to establish the sale price per acre price of land planted at a cost of in excess of $10,000 per acre to the taxpayer in a scam promoted by Erich Abetz.
If we divide $330 million by 176,000 hectares turned into acres it is around $550 an acre but that does not allow for the nearly 100,000 hectares of plantations on other people’s land.
A fair guess is that we have transferred some 100,000 hectares of Tasmania to a foreign company based for tax purposes in Singapore … for approximately $250 an acre.
Congratulations to all concerned …
• Tim Thorne: Anchorage Capital profits at Tasmanians’ expense
The announcement that Gunns Ltd’s receivers, KordaMentha, have sold most of the failed company’s remaining assets to New Forests for a price reported to be $330 million reveals a telling feature of how big business operates.
When Gunns went into receivership it owed secured creditors (of whom the ANZ bank was the largest) $635.9 million. Last year Anchorage Capital bought 70 per cent of this debt at a price believed to be between 40 and 45 cents in the dollar, an outlay of approximately $189 million. Seventy per cent of the sale price is $231 million, which would leave Anchorage with a tidy $42 million profit, less whatever fees they paid KordaMentha.
Nobody as yet has secured the pulp mill site or permits. New Forests obviously wasn’t interested, despite the unseemly haste with which the State Government and the then Opposition (now the Government) rushed to pass legislation designed (at KordaMentha’s request) to enhance the value of those assets. Anchorage Capital might still want to squeeze more profit out of these, but even if they lie idle until way past 2017, the site reverts to bush and nobody makes paper from trees any more anywhere on the planet, $42 million is not a bad profit after six months. It makes John Gay’s gain from insider trading look like chickenfeed.
And what exactly did Anchorage do to earn this? They didn’t employ a single Tasmanian. They didn’t create a single product or provide a single service. The kindest thing to say about them is that they got lucky. Not so lucky were the Tasmanian contractors, small investors and other unsecured creditors who have no hope of ever seeing the $170 million owed to them when Gunns Ltd collapsed.
This whole saga has not been primarily about a pulp mill, nor even about the plantations. It has been about the timber industry being used as a front for the transfer of wealth from ordinary Tasmanians to the coffers of international finance corporations. It has also been about how both major political parties have aided and abetted this transfer. Don’t forget that a considerable proportion of Gunns’ assets were provided in various ways by the State and Federal Governments. This means that some of your money, as a taxpayer, now belongs to the shareholders of Anchorage Capital.
• ABC: New Forests buys Gunns’ timber assets, but not pulp mill permits