Leon Gettler BusinessDay The Age
In an Australian first, the environmental group has adopted the radical strategy of lobbying international banks and credit export agencies not to support the project. So far, banks such as Bank of China, Bank Mandiri, Citigroup, Merrill Lynch, Reiffeizen Zentralbank and Rabobank have told the activists that they have no interest in funding the project. In a letter to the Wilderness Society, one of the banks wrote: “Our branch in Australia was approached, but declined … due to very real concerns.” For the activists, the concerns centre on the destruction of native forests, the loss of trees amid climate change, the use of water and worries that the mill would pump dioxins into Bass Strait.
The environmentalists’ new strategy comes as Norway’s sovereign wealth fund this week sold its $1 billion stake in Rio Tinto due to environmental concerns and VicSuper became the first pension fund in the world to calculate each member’s carbon footprint of their share of investments. With opposition against Gunns and its pulp mill building, the company is giving itself extra time by raising more capital. It has already raised $336 million from institutional investors at $1.50 a share and is seeking a further $91 million from retail investors, which is not underwritten. But Gunns may find it difficult to gain the confidence of retail investors given this week’s closing price of $1.44 — 6 cents lower than the institutional offer price and 63% below its December high of $3.90. Analysts are even now casting doubt on the future of the project. In a note to clients, Citigroup said “Bell Bay looks a pipe dream”. While Gunns’ recent capital raising had taken pressure off the balance sheet, the company would have to raise even more to get the mill up and running, Citigroup said. Deutsche Bank analyst Mark Wilson has also questioned the viability of the project. “Notwithstanding the capital raising, the $A2 billion pulp mill is still not certain to proceed. The company still has to finalise ownership (equity partner), financing, and satisfy the outstanding regulatory conditions,” he said. Read more here
