Apparently and amazingly the gloomy economic conditions are news to Gunns investors who reacted accordingly by dropping another 10% of the stock value today. Who are these people who need Gunns to tell them that Japan’s paper requirements are on the decline and that in turn this will impact sales of woodchips to that market? Surely this would have been factored into the price months ago. No wonder Gunns gets away with the rubbish they publish time after time. On the up side, 82 cents is probably what the stock is worth. Mind you not each, the lot!

In my opinion there is another reason for the reduction in woodchip, pulp and paper products. Quite simply, the demand for paper is reducing as internet use has increased development of on-line accounts and record storage. Banks, utilities, newspapers, insurances, retailers, service providers, airlines and government departments must have greatly reduced their paper usage over the past decade. This trend will also continue. Perhaps our forests will be saved from man’s stupidity by man’s inventiveness? I only wish the Gunn’s Board would live to see the day (so long as that day comes soon!)

The downturn in the Japanese pulp and paper market has been talked about very widely in financial circles and there have been a number of indicators of the past few months that this was directly impacting on Gunns operations in Tasmania.

Yet it is only now that Gunns announce this, officially, to the ASX (resulting in a 10% share price dive).

Gunns is currently being investigated by the ASX for making a misleading statement.

They should also be investigate under the ‘continuous disclosure’ requirement as it appears they are selectively releasing market sensitive information.

Travelling south down the E. Tamar Highway mid morning today (Tuesday), instead of meeting the usual seven or eight log trucks in the twenty minute trip there was just one.  There was just one empty one going south with me.
Does anyone closer than I am to Gunns and truckies know any more?

What is an unsecured notes prospectus (37 page document released on Gunns ASX page)? What is the significance of it for Gunns Ltd?

Looking forward to escorting Mr Gay and Mr Gray off this island ASAP. (Joh B P came to Tas, so maybe they could go to Qld.)
Let us hope we are able to restore our environment as far as possible and save our unique Tas Devil.
Many thanks to SWST from an older woman who appreciates your efforts to correct the devastation instigated by my generation.While I cannot climb a tree, I can line up on the ground to vigourosly protest. Hopefully our water catchments will now no longer be poisoned. May monoculture plantations and MIS schemes DIE!May biodiversity be restored.
To the Gunn family (who are not impressed by what has happened)...I hope this company reverts to its initial business of sawmilling. Selective logging for veneer timbers and building materials in a sustainable fashion is fantastic. I will no longer need to grieve to see all the specialty myrtle, sassafras etc en route to the chipper.
In the hard times to come, I hope we can all forfeit greed and try to care for our environment and each other.

Plan C, Dave (#5).If banks wont’t lend money for working capital (Plan A), try tapping the shareholders. The retail rights offer(Plan B) only raised $1.36m of an expected $90m back in September, hardly enough to cover the costs of the issue.Plan C is to try to raise $15m from punters. At least the notes will rank ahead of the shares.What is interesting is Gunns’ continuous disclosure requirements to ASX. The Notes Prospectus was lodged with ASIC on 24th December, but not received until 5th January.Odd that it took until 3rd February to tell ASX they needed to raise another $15m to pay the bills.

No wonder how things come together, after 3.5 decades of increased spin, the big Japanese Paper Companies FSC certified at home, now come to ask the Tasmanian public, how they feel about the process.
No Private Timber Reserve System - the Tasmanian Forest Industries unique and cunning “One stop shop” system can keep the reality masked away.

The best thing the Premier can do for Tasmania is to pull the Private Timber Reserve System, as it excludes the community including local Governments from direct input in forestry planning. This is so stupid and unsustainable as one would only expect it from a third world island state… Like it or not Premier, this is a man made problem, designed for short term greed by just a few of the elite.
Quote from November 09:
“FSC Australia has received inquiries from companies wishing to source controlled wood from Tasmania. This guidance note is provided to ensure consistency in the advice offered to companies seeking controlled wood from Tasmania.”

The Japanese Paper Companies use this guidance note:
http://www.fscaustralia.org/files/100/controlled wood guidance note nov 2008.pdf

The suggestion that Gunns will suffer financially from falling demand for woodchips is clearly misinformed.

For clarification, please check today’s Examiner:
http://www.examiner.com.au/news/local/news/economy-business-it-finance/reduced-chip-sales-not-a-big-loss-for-gunns/1423859.aspx :
Mr Eastment confirmed there had been a reduction in demand from Japan. “There will be an impact but Gunns will have a reduction in costs against falling income so I wouldn’t say it will be a substantial loss,” Mr Eastment said. He said because Gunns had been a long-time supplier to Japan, the company would pick up demand before other suppliers from around the world. Gunns is the country’s largest exporter of softwood and hardwood and Japan is the Australia’s largest customer. Gunns’ share price opened at 91c and dropped as low as 82c before closing at 84c. 

Rachel Williams has written a story pointing out that falling demand will have little impact on the company.  What a relief.

It’s also refreshing to see The Examiner’s `business reporter’ taking a hard-hitting, critical look at the issue.  Keep up the good work Rachel!  Perhaps The Ex could run another feature explaining what a terrific guy John Gay is?

#9.‘Rachel Williams has written a story pointing out that falling demand will have little impact on the company.  What a relief.’

Maybe she is right. As the price of timber is tied to the price of pulp worlwide, then maybe Gunns will get it for even less, and we, like suckers, will increase our subsidies, thus off-setting Gunns losses.

Who is going to ask the question, and more importantly, who is going to supply the answers?

Robert Eastment reckons things will be OK due to Gunns’ loyal Japanese customers. Trouble is indications are that this downturn isn’t going to last five minutes and by the time things turn around there may be no Gunns Ltd to be loyal to.

Mid morning Wednesday, two northwards full, two southwards empty. Same time period.
Crude maths, based on the two day observation sez that’s a 75% reduction from the usual Bell Bay traffic. Is anyone counting the Triabunna truckloads?
Do any shareholders actually read this stuff?

Whilst Rachel Williams vacuous effort was beneath contempt (even by the deathly low bar set by the Examiner) Robert Eastments effort to both deny reality and shill for Gunns at the same time surely must take the prize.

From the ABC…

Pulp mill analyst Robert Eastment disagrees that falling Japanese demand will affect the mill’s financing.

“Gunns’ funding of the pulp mill I believe will be a seperate issue,” he said.

For my money that has to be the most naive, and/or willfully stupid thing anyone could say about the financial situation Gunns finds itself in.
If Bobby can explain how the loss of 25% of the already anemic share value in a matter of days (the direct result of a collapse in the Japanese markets) does not in some way effect potential business partners for the mill then I really think it is up to him to fully explain how that works.
If not, it is my contention that he should no longer be given media oxygen as a so called expert…...with the possible exception of the Examiner of course, where ignorance is bliss, objectivity unwanted and air is scented with a heady bouquet of fresh pulp slurry.

Don’t look now cockhead but it seems their share price has just dropped even further to $0.70

Could be a good time for you to buy, heh ! You obviously have a lot of confidence in their future prosperity.

As for Rachel, she should go back to being a hairdresser.

I don’t know if you realize it, Andrew, but I think Jarvis had his tongue firmly planted in his cheek when he wrote #9.

Note to Andrew Simons.

Sarcasm is the wit of fools (Oscar Wilde)
Satire is wasted on them (Jarvis)

x

That’s good to know Jarvis is not really a fan of John Gay!

As Robert Eastment continues to get billed as an ‘independent pulp and paper analyst’ he should be publicly respond to a few questions (and perhaps Rachel Williams and Fiona Reynolds should be asked if she has asked Robert these questions as background to their reporting). 

1) Have you worked on the Gunns pulp mill project for potential investors in the project?

2) Is Gunns a client of yours or subscriber to your reports or updates, Industry Edge and/or Pulp and Paper Edge?

3) Subscription to Industry Edge publications cost about $6,215 + GST per year. How many staff of Gunns, FIAT, NAFI, TCA, CFMEU are subscribers?

4) Have you assessed the economic downside of Gunns’ proposed pulp mill, say on the timber industry, fishing industry, tourism, vineyards, brand Tasmania, subsidies to the logging industry etc? If yes, where is you report? If no, how can you claim the mill will be an economic boon for the state? 

Mr Eastment’s arguments that he has previously done consultancies for the ‘environment movement’ (who and when?) or that he took the Legislative Council on a pulp mill world tour do not justify him being billed as independent if he has been engaged by investors that Gunns has approached to fund the pulp mill or if Gunns is one of Industry Edge’s clients or subscribers (I understand subscription fees are their main source of income).

Re #18, “...tell her she’s dreamin’...!”
Isobelle Cameron writes “As Robert Eastment continues to get billed as an ‘independent pulp and paper analyst’ he should be publicly respond to a few questions (and perhaps Rachel Williams and Fiona Reynolds should be asked if she has asked Robert these questions as background to their reporting).”
As an independent person, and proprietor of Industry Edge, Robert Eastment should do no such thing, if he does not want to, (and I can’t imagine him wanting to), and I would suggest that, if he did so respond, it would upset a range of his existing clients, not all of whom are centrally involved in the timber, pulp, and paper industries. They are much more important to him than a gaggle of misinformed spectators. You cannot realistically expect a person in his business circumstance to answer any of your questions 1 to 4. You are showing your own naivety by asking.
I am aware that Robert Eastment has previously done ‘consultancies’ for the ‘environment movement’. In fact, he has said in conversations with me that the Greens have been amongst his most prompt clients in terms of payment for services!
His range of clients and subscribers is much broader than you might imagine. He is a person that I would describe as having a good attitude to the environment, and he has been actively involved in his local landcare group, and I believe at one time he was convenor of that group.
I suggest you go and get a good dose of reality.

19; What’s the problem George? I agree the questions are unlikely to be answered as they are presented but the general thrust is not unreasonable. If someone presents as independent, they surely can’t complain if that independence is scrutinised?

woodworker, he lacks credibility and these questions highlight possible resons why.

Re # 20, there is no problem with independence being scutinised, in fact, if you are seeking the services of a consultant or analyst, you are well advised to assess their performance, credibility, experience, suitability to your area of interest, AND level of independence. There are ways to assess independence, other than asking asking these kind of questions in a public and grandstanding fashion, which, if you were to admit it, are just designed to condemn and ridicule opinions you don’t like.
Consultants operating in commercial circumstances owe it to themselves to conduct their business to accepted and acceptable standards, and also in accordance with the Trade Practices Act, and all manner of state and federal legislation.
Meanwhile, the big issue down at the local kindergaten is whether they like red jelly, or yellow jelly…..

I seem to have inadvertently opened a can of worms here.  My comments about The Examiner’s coverage were in no way a slight on Robert Eastment, an analyst who I hold in high regard.

Rather I was attempting (poorly I suspect) to highlight The Examiner’s inadequate attempts to cover the pulp mill debate fairly and accurately.

Questions about the impact of a company’s operations on its share price would be more appropriately directed to a share market analyst than Mr Eastment.  The Examiner, to my knowledge, rarely even attempts to obtain expert comment, instead relying on a couple of tame stockbrokers from the local office of Shadforths.

Even a cursory glance at Gunns financials would provide Rachel Williams with much information to write meaningful copy.  Sadly, I can’t see that happening under current editorial policy, which seems to be `if it’s a northern Tasmanian business, then let’s talk it up.’

Jarvis

Hi Jarvis,
Be careful about bringing sharemarket analysts into this equation also ! Not many would give you an independent analysis. Most of the Gunn’s analysts work for the big investment banks, and most of these are chasing corporate business. Look at the Blockbuster “BUY” report “Not letting the facts get in the way of a good story” released by Credit Suisse just a short time before the Gunns share placement..I think around a shareprice of A$2.20-2.50. Not only did they dispense some poor Tasmanian tourism advice (no need to go to the Tamar Valley and suggest tourists only stick to the Cataract Gorge, Cradle Mountain and Bay of Fires) but some very poor investment advice. Why ? They were negotiating a significant multi million dollar investment banking fee for the impending shareplacement (done by CS at A$1.60). In fact, CS have been telling punters to BUY the stock from the tippy top. And they arent the only ones ! Shadforths, a local broker who you would expect to have numerous clients in the stock and therefore an obvious conflict of interest, are always giving glowing accounts also. Funny that. Funny that the ABC have never asked them this basic question ? Even those recommending the stock as a SELL are doing so for profit, often taking a contrarian line and deliberately “making a market” so to speak.

Im in no way defending Robert Eastment. Its a fine line but like any analyst, his credibility will live and die by his “public statements” and advice, and as you point out his track record lately is not good ! The ABC and co should be watching.

Don’t go down to the woods today
You’re in for a big surprise….

There are reports that there are police hiding behind every tree to jump out and take the names of anyone entering Gunns forests. The names will then be handed over and Gunns will then sue them.

It is the only way that they have of making any money!