SHARES in timber company Gunns Limited resumed trading at 10.30am today after a six-week break while forest compensation was hammered out.
The shares opened at 17.5 cents, down 3c—or 14.6 per cent—from its 20.5c price when trading was suspended on August 4, valuing the company at $174 million.
The price rose 0.5c in the first few minutes of trade.
In a market update today Gunns indicated it will seek shareholder approval to transfer forest assets into a project vehicle for the Bell Bay pulp mill project.
The update shows that Gunns must quickly liquidate assets to pay back its $340 million senior debt facility with the ANZ Bank by January 2012.
It reveals that the company’s future is tied to the fate of the $2.3 billion Bell Bay pulp mill and its ability to attract a joint venture partner and financier.
“If the investment negotiations are not concluded with required certainty in the timeframe outlined the scope of the company’s asset sales program will be expanded to enable it to reduce its core debt level,” the statement said.
The company told the market that the status of pulp mill permits was a significant and material matter for the company.
Read the announcement:
Please refer to link below for the full announcement:
First published: 2011-09-19 10:56 AM
BY ALISON ANDREWS CHIEF REPORTER
20 Sep, 2011 08:29 AM
GUNNS boss Greg L’Estrange regrets getting involved in the state’s forests statement of principles.
“If we had our time over again, we would have got out months ago,” the forest company’s managing director said yesterday.
“We would have cut and run 12 months ago, sold the business and gone.”
Mr L’Estrange was speaking following a release to the Australian Securities Exchange of a detailed market update, promised since late last week when Gunns agreed to a $23 million payout for exiting native forest harvesting.
He said that the company’s involvement in the statement of principles and the intergovernmental agreement which came after more than a year’s negotiations had provided nothing but anguish for Gunns.
“But if we had pulled out, the effect for Tasmania would not have been good,” Mr L’Estrange said. “There wouldn’t have been the restructure of the industry - there would have continued to be conflict.”
Yesterday’s market update instead revealed a company facing major transition.
Gunns told the ASX that negotiations to lock in a joint venture partner for its proposed $2.3billion Bell Bay pulp mill were well advanced but not complete.
NICK CLARK | September 20, 2011 12.01am
GUNNS Ltd’s share price had a wild ride yesterday after the timber company’s much-anticipated market update underwhelmed investors.
Trading in Gunns’ shares had been suspended for six weeks while the forest agreement was finalised.
The price fluctuated yesterday before closing unchanged at the record low of 20.5c. It went as high as 26c before settling back in the afternoon as 19 million shares changed hands.
There had been speculation that Gunns would announce a joint-venture partner for its pulp mill yesterday, but the company repeated its claim that negotiations were well advanced but not complete.
Industry analyst Robert Eastment said people had expected a stronger statement.
“They are looking for a conclusion to the whole process,” he said.
“Gunns have refined down to two options either a joint venture with the pulp mill or sell more assets.”
Shadforths analyst Matthew Torenius said the update left many unanswered questions.
• LABOR HEADS IN THE SAND OVER GUNNS PERMITS
Courts Must Clarify Mill Permit Status
Kim Booth MP
Greens Forestry Spokesperson
The Tasmanian Greens today expressed disappointment that neither the Minister for Planning nor the Minister responsible for the Environmental Protection Agency could confirm whether Gunns Ltd is acting illegally by continuing site works at its Tamar Valley Pulp Mill site.
Greens Forestry spokesperson Kim Booth MP said it was hard to believe that after pushing a special law through parliament that provided a special permit for the mill, Labor was now unable to verify whether that permit was still valid.
“No-one in Labor seems to have any idea or interest in what’s happening with this disastrous Pulp Mill Permit,” Mr Booth said.
“Today in Parliament I asked the Planning Minister Bryan Green to clarify the legal basis for Gunns continuing its works, but he seemed to not know or not care enough to inform the House and the Tasmanian public.”
“The Director of the EPA has previously said he cannot consider variations to the storm water management plan for the Gunns’ pulp mill until ‘substantial commencement’ has been determined.”
“However, it is the Greens’ understanding that the Director has since admitted that the current site works occurring are temporary settlement ponds that had been approved under the now expired storm water management plan.”
“The responsible ministers appear disinterested in this information which would imply that the current work is illegal.”
“Either Minister Green or Minister Wightman need to take responsibility and have the courts test ‘substantial commencement’ as it is irresponsible to require by default citizens to undertake this work to test these apparently illegal works,” Mr Booth said.
• Evidence of new logging requires urgent government action
Environment Tasmania, the Wilderness Society and the Australian Conservation Foundation have released a report analysing the status of logging in important native forests and new photographs that show new logging activity in forest reserves prescribed by the Tasmanian Forests Intergovernmental Agreement (IGA).
“The settlement and retirement of Gunns’ native forest timber quotas has halved the demand for native forest timber from Forestry Tasmania, and so there is no need or justification for logging within the forest reserve areas. Wood supply for remaining sawmills can be provided from outside of the important native forests identified for protection,” said Dr Phill Pullinger of Environment Tasmania.
“Aerial photographs taken in late August and last week show Forestry Tasmania continues to log inside the 430,000 hectares of unique and important forests identified for immediate protection in the IGA,” said Vica Bayley of the Wilderness Society.
“In fact, our report and the new photos show Forestry Tasmania has not rescheduled logging outside this area and has even commenced logging new coupes since the IGA was signed.”
“While we are encouraged to see progress on key components of the intergovernmental agreement — including the retirement of Gunns’ wood quota, funding for timber workers and contractors and the independent verification group — we have seen no progress on halting logging inside the nominated forest reserve areas,” Mr Bayley said.
“Environment groups again call on the state government to honour the agreement it has signed by directing Forestry Tasmania to declare the nominated forests as informal reserves and immediately appointing an independent expert to undertake the rescheduling,” said Denise Boyd of the Australian Conservation Foundation.
The report released today is part of environment group signatories’ ongoing commitment to implementing the IGA and will provide governments with verified, accurate information to help achieve the forest protection outcomes of the IGA. The state government must now ensure delivery of the critical plank of the IGA – forest protection.
Dr Phill Pullinger, Environment Tasmania Vica Bayley, The Wilderness Society Denise Boyd, Australian Conservation Foundation
• FORESTRY TASMANIA MUST COMPLY WITH FORESTS IGA
Contracts Supply Outside 430, 000 ha Reserve
Kim Booth MP
Greens Forestry spokesperson
The Tasmanian Greens today called for Forestry Tasmania to end logging activity in the 430, 000 hectares of high conservation forests, saying that there is no excuse for not complying with the Forests Intergovernmental Agreement (IGA) now Gunns’ sawlog quota is to be retired.
Greens Forestry spokesperson Kim Booth MP said that Forestry Tasmania had been using the sawlog quota as an excuse to keep logging those areas, but now that excuse no longer stands with the completion of the commercial settlement process.
“The IGA stipulates that while the independent Verification Process, conducted by Professor Jonathon West, is underway that areas outside the designated 430, 000 hectares reserve are to be sourced to meet current contract obligations.”
“Despite this, Forestry Tasmania have attempted to mount a spurious claim that contracts could not be met without accessing this area to try and keep justifying locking in the ongoing destruction of these iconic forests.”
“The simple fact is, now that the commercial settlement process is completed, Gunns’ sawlog quota is available to be retired which reduces the overall legislated volume that Forestry is claiming it has a legal obligation to provide.”
“This rogue agency is desperate to maintain its status quo, come hell or high water, yet with the buy-back of Gunns’ quota, it has run out of excuses. Forestry are in for a surprise if they think they can just grab the money and run.”
“There are no further legitimate obstacles to Forestry ceasing all logging and roading activities in the designated 430, 000 hectares, other that Forestry Tasmania itself.”
“It is time that this Government Business faces up to the fact it is owned by the public, and the Minister needs to spell out in no uncertain terms that Forestry is required to comply fully with the IGA,” Mr Booth said.