Image for Gunns is dead. Long live Gunns. Gunns Bottom 10 of worst performers

On the final day of the financial year when a bankrupt State Government - including now silent Green Cabinet members - is giving Gunns more of our money to keep it afloat while jobs and schools disappear, it is interesting to note what was written years before predicting this ...

A growing weight of financial analysis suggests that the economics of plantations (with which native forests are being replaced), dependent on global pulp prices rising, are not assured but are a huge gamble for Tasmania, whose government, as the Australian Financial Review put it, has ‘tied the state’s economic future to the success of Gunns and its tree farms’.
from Richard Flanagan, Gunns. Out of Control, May 2007: On Tasmanian Times, HERE

ABC Online: Government defends mill loan:

The Tasmanian Government has defended the approval of a loan to a local company to buy Gunns’ Triabunna woodchip mill.

The Government has provisionally approved the loan to help Fibre Plus fund the mill’s purchase but several conditions must be met before the loan is finalised.

Economic Development Minister David O’Byrne told a budget estimates hearing Fibre Plus met two of his staff on June 7th, four days after first approaching his office for financial support.

The family-owned company then met department representatives who helped put a case together to take to the Tasmanian Economic Development Board.

Mr O’Byrne would not say why the Government approved the loan.

The Greens’ Tim Morris asked Mr O’Byrne if he was satisfied Fibre Plus had a market.

“Can you inform me as to whether that market is one that involves woodchips or wood pellets?”

Mr O’Byrne said the board had made a rigorous assessment of the loan.

“I’m not going to speculate on market, or potential market or not.”

Mr O’Byrne signed off on the board’s recommendation to approve the loan last Wednesday.

It is understood the Premier and Treasurer Lara Giddings followed suit earlier this week.

Mr O’Byrne could not give detail on security being offered on the loan and said it would be inappropriate to detail the loan amount.

The owners of Fibre Plus say the loan makes up a small part of the undisclosed sale price of the mill.

Mr O’Byrne says it is not unusual for businesses to approach the Government for a loan.

“We get approaches virtually every day seeking government support.”

Earlier this month, Gunns told the Australian stock exchange it expected to finalise the sale yesterday, depending on the ‘satisfactory progress’ of the forest peace deal

Examiner: Timber group rejects forest agreement:

BY ALISON ANDREWS
30 Jun, 2011 08:36 AM

A MAJOR signatory to the state’s forestry industry statement of principles started advising its members yesterday that it would not sign the agreement released last week.

Timber Communities Australia Tasmanian manager Barry Chipman said late yesterday that the decision had been made after a massive response from members.

The agreement, the result of months of negotiations based on the statement of principles, was released by facilitator Bill Kelty.

“We are not saying that we are walking away from the forest talks and that we won’t sign an agreement in the future, but my board can’t sign it at the moment,” Mr Chipman said.

He refused to say which areas of the agreement caused problems for his group.

WSJ: Protection looms for MIS creditors

• ABC Online: Gunns’ returns in bottom 10

Tasmanian timber company Gunns has ended the financial year in CommSec’s bottom 10 for sharemarket returns.

Gunns is yet to secure a financial backer for its $2.3 billion pulp mill and is selling assets to finance the Tamar Valley project.

It has been listed in CommSec’s bottom 10 companies on the ASX 200 for the 2010-11 financial year.

Financial analyst Matthew Torenius says it has been a tough 12 months for the company, with the high Australian dollar and tight markets providing the biggest challenges.

Mr Torenius says Gunns is in debt reduction mode.

“You’ve seen Gunns currently trading at new record lows at around 26, 27 cents,” he said.

Earlier this week, Gunns confirmed more than 100 workers could be out of a job by the end of the month if buyers can not be found for five sites across the state.

ABC Online HERE
Follow the Gunns Share Price HERE

First published: 2011-06-30 09:48 AM