The following documents have been presented at Gunns Limited 2011 Annual General Meeting:
Please refer to the links below to view the full ASX announcements:
Managing Director’s Address
ASX & Media Release:
GUNNS RESTRUCTURING PROGRESSING TO PLAN
Gunns Limited Managing Director Greg L’Estrange today said the company was on track to reduce its net debt from $616 million to $360 million by the end of January 2012.
Mr L’Estrange told the company’s Annual General Meeting that the company’s transformation from the native forest sector and non-core activities was almost complete, with the remaining sale processes concluding by the end of January.
He said the completion of these sales prior to the expiry of the company’s current senior debt facility of $340 million, would allow the company to reduce its total indebtedness from $665 million in December 2009 to $360 million.
“We are proactively working with the banking syndicate to extend the facility to allow for the completion of the divestment program and to achieve clarity around the Bell Bay pulp mill.
It is estimated that this facility will be reduced to approximately $216 million as of 31 January 2012.
“Although this remains at a high level due to the value of the encumbered assets, the conclusion of the Bell Bay pulp mill process will allow for the long-term structuring of the company’s debt to be finalised,” he said.
The company expects to net $185 million cash before 31 January 2012, from asset sales currently under way. These transactions will complete the company’s exit from the Australian native forest sector. Mr L’Estrange said the company had made outstanding progress on its transformation strategy. “This progress has been fundamental in transforming the company and providing for the environment that will allow a pulp mill to be created,” he said.
“If we had not made the changes that we have, there was simply no chance of attracting debt or equity to the broader company activities, let alone the pulp mill project.”
“Bringing to a conclusion the equity and debt required to construct the Bell Bay pulp mill will complete the transformation of the company to a modern and sustainable business.”
“It not only allows us to significantly reduce our reliance on the Asian woodchip market, it underwrites the continued planting of the plantation base which supports it.”
“The work undertaken over the past 18 months on the transformation of the company now allows the project to stand on its own, without the implied association of with the native forest debate in Tasmania.”
Mr L’Estrange said the company was continuing positive negotiations for a preferred equity partner in the mill; however, the company was not yet in a position to announce the partner, due principally to the current financial crisis in Europe.
“We remain positively engaged in the discussions and the main topics are around equity contribution, timing and an agreed debt funding process,” he said.
“The negotiations are no longer about the potential brand damage of being associated with a company engaged in the Tasmanian native forest industry.”
“During the past year we have completed some significant permit milestones, including the granting of our operating permits by the Federal Environment Minister.”
“This followed the completion of a detailed hydrodynamic study in Bass Strait which confirmed the project will not adversely impact the marine environment.”
“At the same time our federal permits have been strengthened to include the commitment to Elemental Chlorine Free light technology and 100 per cent plantation usage within the mill.”
At the completion of earthworks, which began in August, the company’s investment so far in the mill will be $240 million.
The mill’s projected capital cost, including investment so far, is $2.3 billion.
Mr L’Estrange said the current year would again be a difficult trading year, with both the domestic housing market and the international woodchip markets being very competitive.
The business will also be impacted by the conclusion of a number of the transactions mentioned today, for finalisation in the coming couple of months. The final timing of these transactions will allow Gunns to update the market, which the company expects to do prior to 20 December 2011.
Gunns asset sales completed:
• Withdrawal from managed investment scheme market
• Tasmanian retail stores
• Tasmanian native forest land
• Wine business
• Walnut business
• Entally Estate
• Tasmanian native forest woodchip business
• A large number of surplus vacant commercial properties.
Gunns asset sales currently underway:
• Auspine land and tree estate – scheduled for completion prior to 31 January 2012
• West Australian jarrah business – subject to approval by the buyer’s board and scheduled for settlement on 1 December.
• Tasmanian hardwood sawn timber – scheduled for settlement 1 December.
• Heyfield native forest sawmilling business – due for settlement in December.
• MIS loan book – scheduled for completion prior to 31 January 2012.
• Orana woodchip vessel – scheduled for completion before 17 January 2012.
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Gunns AGM Sofitel Collins Street November 24 2011
Plan B is also Plan A
This is the ‘Paris’ end of of Collins Street, up the road from Cartier. I’m writing from the 49 floor, thanks to a kind TAP member. The AGM took place in a carpeted theater with crushed velvet seat covers.
There was a protest outside but there were as many security and police as protestors. The mood was sombre inside. Chris Newman kicked-off followed by Greg L’Estrange. They outlined the ‘tough’ trading conditions just like last year and predicted another tough year. At least they didn’t have TAP outside dropping a cardboard pulp mill from a pole. What they did have inside was an argumentative Stephen Mayne, representatives of the 3 Tamar Valley anti-mill groups, The Wilderness Society and some very dissatisfied mainland shareholders. As the meeting progressed this diverse group grew increasingly focused on the company’s one and only strategy.
To prevent insolvency they need to go into more debt to build the pulp mill. Mayne asked if the company was already insolvent? Their auditors seem to think they were not. Gunns are ‘open and transparent’. They are so transparent they were unable to tell us where the head office is. Somewhere north of Launceston apparently. Gunns are no longer in MIS and want to import chips into Tassie. Their only chip carrier the Orana is up for sale. The board became increasingly frustrated with Mayne’s use of the word ‘fire sale’. This was a restructure not a fire sale they insisted.
L’Estrange said the ‘minority groups’ opposed to the mill were not the ‘keepers of the social license’. He later claimed he did not say that at all. Gunns could not announce a joint venture partner today because of the ‘turmoil in the EU’. The board found it more difficult to answer questions after all the big figures of millions of green metric tonnes and millions of dollars had been quoted. Mayne asked why Gunns exited native logging without a compensation proposal in place first?
No answer. Lucy Landon-Lane asked how the current three court cases (not counting the insider trading case) would effect a potential pulp mill investor. No answer. Stephen Mayne asked what was stopping a potential joint venture partner from buying the company at 17cents a share? Nothing was stopping them according to Newman. What we heard was the whole future of Gunns was the pulp mill, seemingly linked to a return to pre-crisis economic conditions. Eventually a shareholder asked if there was a ‘plan B’? Well yes and no. You see ‘plan B’ is also ‘plan A’. There you have it.
Protest outside ANZ Launceston
Anne and Stephani deliver the letter
• Members of Pulp the Mill, Friends of the Tamar Valley, and TAP Into A Better Tasmania urged the ANZ Bank not to throw good money after bad
Approximately 50 members of Pulp the Mill, Friends of the Tamar Valley and TAP Into a Better Tasmania stood with black flags and No Pulp Mill placards in a silent protest outside the ANZ Bank’s Launceston branch at lunchtime today.
FTV and PtM members Anne Layton-Bennett and Stephani Taylor also delivered a letter addressed to branch manager Bruce Fisher, which expressed concern the ANZ is continuing to support Gunns Limited “despite the Tasmanian timber company’s significant exposure to debt, and the requirement to repay reported loans of more than $500 million before 30th June 2012”.
While acknowledging the bank publicly announced three years ago it would not provide funding for Gunns’ controversial Tamar Valley pulp mill project, a position it re-stated in June, Ms Layton-Bennett said the ANZ’s recent provision of an additional $200 million sends a contradictory message, both to the financial markets and the Tasmanian community.
“Now that Gunns has sold off all its secondary interests in vineyards, hardware stores, sawmills and walnuts, the pulp mill is now the company’s core business, which leads to the conclusion any more loans made by the ANZ signal the bank’s approval for a corruptly approved project that has been the subject of controversy for more than seven years. Even its Lindsay Street offices have been sold, so Gunns is staking its future on the Tamar Valley pulp mill,” she said.
Community groups PtM, FTV and TAP Into a Better Tasmania said the provision of any support for the pulp mill will result in the ANZ Bank contravening the Equator Principles, to which the Bank proudly states it is a signatory, and which are recognised internationally as ‘the industry standard for environmental and social risk management’. http://www.anz.com/about-us/corporate-responsibility/customers/responsible-business-lending/equator-principles/
“Despite a belated attempt to “consult with local communities about concerns communities may have,” Gunns will never receive a social licence to build or operate a pulp mill in the Tamar Valley. Any financial institution that chooses to facilitate the mill’s construction should recognise it will face an ongoing national campaign of community opposition, which will result in serious damage to its international reputation,” said Ms Taylor.
Representatives from PtM and FTV also attended Gunns’ AGM in Melbourne today, and afterwards met with ANZ’s Head of Sustainable Development, Shane Lucas.
ANZ executives Mike Smith (CEO), Gerard Brown (General Manager), and Mr Lucas also received copies of the letter.
From Gunns website in the aftermath of its AGM
• SENATOR THE HON RICHARD COLBECK
Senator for Tasmania
Shadow Parliamentary Secretary for Fisheries and Forestry
Shadow Parliamentary Secretary for Innovation, Industry and Science
M E D I A R E L E A S E
24 November 2011
Protestors demonstrate they are anti- all forestry
Environmental crusaders have today confirmed they are against any sort of forestry activity and they cannot be taken seriously.
Forestry protestors in Melbourne today have been scaremongering about the amount of plantation resources needed for the Tamar Valley pulp mill.
“The truth is these short-sighted protestors are utterly anti-forestry, be it in a plantation setting or in native forest estates,” Coalition Forestry spokesman Richard Colbeck said.
“Gunns Ltd altered the original pulp mill plans and exited all native forest activity because of pressure from protest groups over use of native forest resources.
“It is completely hypocritical of activists to now target Gunns with scaremongering about expansion of plantation resources. You cannot take them seriously.
“If the native forest sector is shut down, and the plantation estates restricted, where do these protestors think wood and paper products will come from?
“What these protestors ignorantly refuse to accept is that wood is a renewable natural resource and that active forest management, particularly in native forests, is scientifically proven to have a host of environmental benefits,” Senator Colbeck said.