***** THE FORMAT OF THIS TIMELINE HAS BEEN CHANGED TO MAKE IT EASIER TO LOAD *****
********EACH YEAR IS
NOW ON A DIFFERENT FILE WITH LINKS TO NAVIGATE *********
The author of this site is of the opinion that the proposed pulp mill project is now dead but Gunns cannot admit it without breaking banking debt covenants.
Gunns are now in survival mode, hoping to sell assets to stay afloat and desperate to maintain the myth of the pulp mill - with the least possible expense.
2010 - John Gay and Robin Gray bite the dust
2009 - Gunns starts clearing site
2008 - ANZ Bank pulls plug on mill
2007 - Gunns pulls out of RPDC
2006 - IIS released - RPDC hearings
LATEST NEWS AND DEVELOPMENTS 2011
10/2/2012: JUST HOW ETHICAL IS THE RICHARD CHANDLER CORPORATION? 9/2/2012: COMMENT - $280 MILLION DOES NOT A PULPMILL MAKE 8/2/2012: GUNNS ANNOUNCE SHARE OFFER/CASH INJECTION 6/2/2012: GUNNS' SHARES SUSPENDED PENDING ANNOUNCEMENT 2/2/2012: GUNNS' FACE COURT IN APRIL 30/1/2012: GUNNS' FINANCE RENEWED 18/1/2012: ANZ TARGETTED AGAIN 13/1/2012: GUNNS CLAIMS A GREAT VICTORY! 12/1/2012: GUNNS' SHARES JOIN PENNY DREADFULS 5/1/2012: GUNNS' SHARES SUFFER ANOTHER COLLAPSE 29/12/11: HAMPSHIRE MILL TO RE-OPEN? 23/12/11: COMMENT 23/12/11: GUNNS' PROFITS SINK AGAIN 12/12/11: LAUNCESTON COUNCIL VOTE DOWN MOTION OF SUPPORT 29/11/11: GUNNS FINALLY ABOUT TO COMPLETE GREEN TRIANGLE SALE 24/11/11: L'ESTRANGE GETS ANOTHER SEVEN MONTHS 24/11/11: SAME OLD STORY AT AGM 22/11/11: GAY TO FACE COURT 21/11/11: CHIP MARKET COLLAPSES 6/11/11: GOVERNMENT CONSIDERS NEW CHIP FACILITY 5/11/11: RAVERTY SAVAGES CRIKEY 2/11/11: CRIKEY DECIDES MILL IS BEST THING SINCE SLICED BREAD 26/10/11: NEW LEGAL ATTEMPT TO STOP MILL 25/10/11: GUNNS AGM TO BE HELD IN MELBOURNE ON 24th NOVEMBER 20/10/11: ASX - PLEASE EXPLAIN 6/10/11: HUGE HEALTHCARE CUTS 4/10/11: GUNNS, GOVERNMENT AND FORESTRY COOK UP COMPENSATION DEAL 2/10/11: NOT HAPPY GUNNS 28/9/11: EPA SAYS PROJECT HAS COMMENCED 27/9/11: UPPER HOUSE REJECT FORESTRY AGREEMENT 21/9/11: GOVERNMENT ORDERED TO DISCLOSE LEGAL ADVICE 19/9/11: GUNNS' SHARES GO BACK ON MARKET FOR WILD RIDE 14/9/11: LEAKED EMAILS EMBARRASS GUNNS 14/9/11: GUNNS ACCEPTS NEW OFFER 9/9/11: GUNNS GET NEW OFFER 7/9/11: PULP THE MILL GO TO COURT 5/9/11: GUNNS REJECTS STATE OFFER 4/9/11: EARTHMOVING MACHINES ARRIVE 31/8/11: GUNNS SAYS THEY'VE STARTED 27/8/11: DESPERATION RULES 25/8/11: GUNNS POSTS LOSS OF $355m. 23/8/11: ONE WEEK TO GO 19/8/11: GUNNS DELAYS FULL YEAR RESULTS 19/8/11: GUNNS STARTS THE BLAME GAME 16/8/11: GUNNS INSISTS IT WILL START SOON 11/8/11: ARROGANCE, STUPIDITY AND IGNORANCE HAS CAUSED GUNNS' DEMISE 8/8/11: GUNNS WILL NOT GET ANY FEDERAL MONEY 7/8/11: GUNNS GETS MONEY - AMOUNT TO BE KEPT SECRET 6/8/11: RUMOUR-MILL RAMPANT 4/8/11: GUNNS NOW IN TRADING HALT 4/8/11: GUNNS ON THE NOSE WITH FEDERAL GOVERNMENT 1/8/11: GUNNS TRYING TO SHORT-CHANGE WORKERS 31/7/11: CRUNCH TIME FOR GUNNS 21/7/11: CHICKENS AND EGGS AT TRIABUNNA 20/7/11: GUNNS DENY THEY ARE DESPERATE FOR CASH 17/7/11: GUNNS SAY THEY READY TO START 13/7/11: GUNNS SELL TRIABUNNA/HEADQUARTERS 7/7/11: GUNNS SAY THEY ARE STARTING CONSTRUCTION - THE END GAME? 30/6/11: ANZ BANK BAILS OUT GUNNS 24/6/11: FOREST AGREEMENT 24/6/11: GUNNS SELLS PLANTATIONS 23/6/11: TRIABUNNA PURCHASER ASKS FOR GOVERNMENT LOAN 16/6/11: COMMENT
Anti-pulp mill group Tasmanians against the pulpmill (TAP) claim to have found evidence that the RCC is not all that it makes itself out to be.
The following link would appear to indicate that they have been thrown out of Monaco and Dubai.
The Spymaster of Monte Carlo
RCC have given Gunns a lifeline and maybe a year's breathing space. It does not make the pulpmill more likely. If RCC thought the project
was a brilliant investment, they would put the money in themselves. Any corporation contacted by RCC will ask the same question. The deal
is one that any company that was not desperate would refuse. It virtually hands over control and dilutes the shareholder base. It could be
that RCC see Gunns' plantations and realise that with some careful manipulation, they could come their way at a bargain price. Gunns have been
trying to find a JVP for 5 years without success and nothing has changed - except it's much more expensive, not so competitive because of the high
Australian dollar and Gunns have sold or are selling their supply of plantation wood. Even if Gunns gets $280m. it will be used to retire
debt as will all the proceeds from asset sales. Last time Gunns tried to raise capital on the ASX it was a dismal failure. Matthew Denholm
in the Australian thinks it might be a ploy:
The view in the Australian
The Richard Chandler Corporation (RCC) will take a 40% share in Gunns in return for a cash injection. Gunns will also try and raise capital
on the share market via a rights issue. The total cash raised could be $280m. This will effectively take the pressure off Gunns for the
present. They will, however, still need a joint venture partner and finance to build a pulp mill.
According to Gunns' statement to the ASX, an announcement regarding equity will be made on Wednesday. Have they found someone brave enough
to inject some capital in to this failing company?
Gunns now face a serious legal attempt to cancel their building permits in the Supreme Court in April. Today Gunns gave up trying to get it
put off indefinitely.
Gunns' financiers, mainly the ANZ Bank, must know that they will get more of their money back in the long term if they allow Gunns to continue
operating rather than sending them in to administration with a fire sale of their assets. Not that Gunns deserves to survive - it's a pragmatic
decision. But the time of the extension is interesting - just 11 months.
Gunns' bankers are once again being targetted by anti-mill groups. The bank has to decide whether to roll-over Gunns' main debt which is due
on 31st January. If Gunns go into administration it will be difficult to sell off assets at a good market price so the ANZ may decide to let
Gunns live a little longer - although they must be balancing that against the inconvenience and loss of business that continuing to support
Gunns entails - a poison chalice indeed!
The case against Gunns by the group 'Pulp the mill' was dismissed yesterday although the group had decided to withdraw because of the
Supreme Court action by the Tasmanian Conservation Trust. Gunns have issued a press release claiming the group failed to produce any
evidence - but they did not explain the reason why. This is exactly the sort of one-sided and misleading press release that got the
public off-side with the project in the first place. Nothing changes with Gunns - pathetic.
Gunns' shares are now down below 10 cents. There has been no announcement on refinancing yet, it is due by 31st January.
Gunns' shares ended today on 10.5 cents - a drop of 20% on the recent trading range. It doesn't look as though there is any good news in the
pipeline at present. The loans due to the ANZ bank are due to be paid this month. Gunns cannot possibly do this so will the bank pull the plug or
sustain them and hope that something turns up? We shall see.
A report in the Advocate newspaper suggested Gunns were thinking of opening the Hampshire woodchip mill. The only wood available would
be the plantations that are touted for use in the proposed pulp mill. If they reopen the mill, it is a virtual admission that the pulpmill
is not going ahead and that the policy of selling all assets to avoid bankruptcy continues.
Here we are: another year gone by with no sign of a joint venture partner. Without the State government's injection of funds (on very dubious legal grounds),
it is doubtful
Gunns would have been able to make a start on earthworks. In fact, the cost of the project will be escalating by $20m. a month so Gunns
spending $3m. a month on earthworks means they are going backwards fast. Greg L'Estrange has only got a contract to 30th June 2012 so surely
it will all be over by then. With the looming economic turmoil in Europe, the chances of Gunns getting this project up are zero and
they almost certainly know this but are trying to stave off looming possible administration.
Gunns' operating profit is down 40% to $30m. according to the latest market update. The figures do not include interest payments so it is likely
that they are in fact running at a loss. The 'Green Triangle' sale is now marked down for 31st January 2012 - the day Gunns' debts are
due. The share price is languishing around the 12 cent mark. Meanwhile, the Pulp the mill group have called off their court case against Gunns as it is
just duplicating the one coming before the supreme court next year.
Launceston City Council voted against a motion to support the pulp mill. The LCC had originally voted not to support to project until
Gunns did a proper risk and traffic assessment. Gunns have never bothered to do these so the Council stance remains the same.
Later than originally stated, the sale of the 'Green Triangle' timber assets in Victoria is about to go through with a consequent debt
reduction of $120m.. Gunns hope to sell other assets before January to reduce debt to between $300 and $400m. - Plus the pulp mill debt of course
at $240m. which means that if Gunns admits it's all over, their assets will barely cover their liabilities. Events in Europe suggest it was
not a good idea to tie the pulpmill in to their resolution - things are going from bad to worse there. Gunns' share price has halved in
the last month after a short revival.
Gunns' CEO Greg L'Estrange has only had his contract extended by 6 months. So it is likely the fate of the pulp mill project will be decided
one way or the other by then. The AGM had protestors outside as usual even though it was held in Melbourne.
Gunns are still talking constructively with pulp mill partners according to Gunns' CEO Greg L'Estrange at their AGM in Melbourne today. Ho Ho!
The excuse is the financial turmoil in Europe but this doesn't hold water as the Scandinavian countries where a likely partner would come from
are not really affected by the crisis. The projected cost is still $2.3bn for the project - the same as two years ago. Who are they trying to
fool? Project cost inflation is running at 10% so by now the project will take $2.8bn to build. To pretend otherwise is pathetic.
Debts are being reduced by asset sales but they will still owe over $300m. plus the pulp mill debt ($240m.)with a greatly reduced asset backing. Will they survive?
Former Gunns CEO John Gay is to face charges brought by ASIC of insider trading. He sold three million shares @90 cents - just before a profit downgrade
resulting in a share price crash. There is also a shareholder action proceeding against Gunns
for not releasing information before the share price crashed.
The Bell Bay exporting facility has refused further deliveries as the woodchip export market has completely dried up for the present.
The latest crazy idea from this incompetent State government is to build a new wood chip exporting facility in the south to replace
Triabunna, the non-opening of which is the subject of a blame game. The truth is that Forestry does not want to deal with Triabunna
because they will not process timber from areas supposed to be protected. All this has nothing to do with the pulp mill but just shows
how Forestry controls the State government agenda. A new facility would be an economic disaster with the taxpayers picking up the bill - again.
Pulp mill expert Dr Warwick Raverty has written a rebuttal to Stephen Mayne's article in crikey pointing out that he has been badly mislead
by Gunns. Locals say that the site workings are very, very slow but on the day Mayne arrived, every man and his dog were there to put on a show
of getting things done!
The Tasmanian Times
Crikey founder Stephan Mayne has, on the basis of a two hour visit to the site at Longreach and some Gunns' hospitality, given the
project the thumbs-up. It is obvious from the article that Mayne has swallowed Gunns' propaganda hook, line and sinker and not bothered
the inform himself from other points of view. What a boofhead!
The Tasmanian Conservation Trust, obviously backed by some deep pockets, are taking the commencement issue to the High Court of
Tasmania and then, if they lose, to the Federal Supreme court. A decision that the mill had not commenced by 30th August (which
it quite clearly had not) would mean the end of the project for the present.
Either Gunns are scared of continuing demonstrations and awkward questions at their AGM or they are getting ready to leave Tasmania
for good. It might backfire as there are plenty of demonstrators in Melbourne! Their yearly report presentation is particularly lavish
this year and in it they say they hope they will sign up a joint venture partner before the end of the year. I bet they do (hope). They could be in
administration by then according to some sources.
Gunns have been asked if there is any reason there share price has risen sharply in the last week. The company have replied they have
no idea and that no announcements are forthcoming. The likely reason is that asset sales are due to concluded at the end of October
and the announcement may give the shares a boost. Some funds have realised and bought in advance. Others have assumed somebody knows
something and jumped on the bandwagon.
Just days after these revelations, the government announced there would be $60m. taken out of the health budget - about the amount that
Gunns have benefited (with cancelled debts) from their 'compensation' deal. Have the government got a death wish?
It now transpires that Gunns wrote to Forestry Tasmania in April giving up all their native forest rights. The minister, Bryan Green,
was informed in May. So then, when Gunns realised that they had potentially missed out on compensation, the contracts were renegotiated
to allow the Government to 'compensate' Gunns to the tune of $23m. - over double if you count the cancelled debt to FT. Also in the letter
is the admission that the pulp mill had not commenced - contrary to their claims when the permits expired. The whole thing stinks.
The letter and ministerial briefing
Gunns' auditors in the yearly financial statement, released at close of business on the last possible day, have several
warnings for investors in the company. The auditors point out that Gunns have to repay over $500m. in the next 12 months
by selling assets or by re-financing. According to their books, Gunns have assets valued at over $900m. but, so far, those sold
have been at a large discount to their valuation. Part of these assets is the money spent on the pulp mill project, over $200m.,
which would have to be written off if the project folds leaving Gunns with debts almost as large as their supposed assets.
No bank would back a company under these circumstances so no wonder Gunns are desperate to keep the pulp mill dream alive.
Gunns' CEO Greg L'Estrange says he is talking to two possible joint venture partners but it is difficult to see anyone being interested
in the current economic climate. The cost of the project has not been updated for two years now - it is likely to be close to $3bn.
now and the fact that Gunns are still saying $2.3bn. would indicate they are living in fairy land.
Well, surprise, surprise! Why has it taken so long? Could it be that they got legal advice which they didn't like and so
fell back on advice from the solicitor-general - basically part of the government? This after Lara Giddings said that they would
not get involved and the decision would be apolitical. Of course, the S-G's advice has not been released. Another backroom deal.
This does not affect the payments to Gunns and Forestry Tasmania. Why? Good question. But Gunns have said in the past that the
agreement is necessary for Gunns to find a JVP (if there are any interested in investing in this shambolic mess).
Tasmania's upper house of parliament has ordered the government to release legal advice relating to the buy-back of Gunns' native
forest rights. The fact that the government is trying very hard not to is in itself suspicious. More backroom dodgy deals?
Gunns'shares fluctuated wildly today after five weeks suspension from 17c to 27c but ended up at the same value as their suspension
value - 20.5 cents. The statement that came with it said nothing that hadn't been said before many times. Gunns claim to have several joint
venture partners interested which is strange because just a few weeks ago, they admitted they had none and they said they were going
to build it alone. Of course, nobody in the market believed this so now it's back to JVPs waiting in the wings. Meanwhile, nothing has been
heard from the EPA which is supposed to be deciding if Gunns' permits have lapsed. The EPA is a government body and will decide in favour of
Gunns because that is government policy - yet another rort. The fact that it is taking so long is an indication that the best minds are
at work trying to prove that two plus two equals five.
Leaked emails from the early days of the assessment of the project appear to indicate Gunns trying to hide the possible pollution
effects of the mill. And, in another embarrassment, protesters stopped work on the pulp mill site.
Tasmanian Times
Believed to be $23m. to Gunns plus resolution of the disputed debt with Forestry Tasmania.
The State government has made another offer for Gunns' native forest rights. As usual, no details are disclosed and Gunns have as
long as they like to reply.
Gunns are now facing a court action to stop earthworks at the mill site. The permits have expired but this arrogant company is
carrying on with the work regardless. The State government and EPA are too spineless to do anything about it. They have even suggested
that Gunns may get more compensation as they've rejected the previous offer. Sounds just like when they pulled out of the State assessment
process and were rewarded with a much easier one. And Gunns didn't bother sending the information in for the shareholders action either
and that has been postponed for a month. The shares are still frozen. Just how much and for how long is this appallingly behaved
company going to get away with it? Their public image has sunk to new lows taking the government with them. It can only surely be weeks now before a final collapse.
Gunns has rejected the State government offer to buy out their native forest rights. The most likely reason for this is to
give them an excuse to keep their shares off the ASX. It is nearly five weeks now and when if and when they are re-listed,
there is likely to be a huge dumping.
Three large earthmoving machines arrived today at the Longreach site. The permits have expired and conservation groups could
launch an injunction at any moment. What are Gunns up to? Quite simply they need to put on a show to get their shares back on the
market otherwise it's all over. So they will be making a big mess on the hillside overlooking the estuary to try and save the company.
They have no hope of getting any further and, in fact, may be bust before they get the bill for the current work.
In a statement to the ASX today, Gunns claim they started earthworks at the site on the 29th. That's rubbish. The permits have expired
but Gunns are going to try and bluff their way through the difficulties. It should be up to the government to sort out this mess as
they created it in the first place but Lara Giddings says that it would be political interference. Well, Lara, we've had nothing but
political interference in this project for the last seven years - why stop now? Lara is now down to 19% in the polls so may not last much
longer as Premier. Gunns are considering an offer from the State government to buy back their native wood quotas but as it includes
a settlement with Forestry Tasmania, who claim they are owed $25m. by Gunns, the amount is unlikely to be more than a few million.
Gunns' shares have now been suspended for four weeks - it looks as though it could be all over soon.
Gunns are now in desperation mode. They have announced they have awarded a contract for the earthworks - only $20m. worth instead
of the promised $30m. The works will take seven months so it's going to be fairly slow going ($3m a month). Their 'presentation' said that
$30m. would be spent on the project this year so it looks as though that's all that's going to happen. The alternative, doing
nothing, was not an option as they would be wiped out in the stock market. They claim that they are talking to a joint venture
partner: Well, they would wouldn't they? - because blind Freddy can see Gunns cannot go it alone. The date stated for final
closure is March 31st 2012. The discussions cannot have progressed much if it's going to take 7 months.
But why have they left it until the last minute to start earthworks? In fact it's unlikely that any work will be done on the
pulp mill footprint before Wednesday when the permits will have expired. Surely if they were confident that the project is
going ahead they would have made sure they did a few weeks work before Tuesday. The EPA now say Gunns can work on the site until
they have received legal advice (how incompetent - they should have been ready for this weeks ago). But, of course, an injunction
could be served by a anti-mill group stopping work until it's sorted out. It doesn't seem likely that the EPA, a government
agency will stop the project in view of the government's bending and twisting of the rules in the past! In fact, the government
are almost certainly pulling the strings to get what they want without getting the blame.
Gunns may have been trying to get the State government to pay them out for their native wood contracts (no payout = no mill)
but it hasn't worked. They've had their bluff called. Or maybe Gunns are hoping an injunction will delay the project for a while
to save them money which they cannot afford. JP Morgan say that starting the mill before financial closure is a risk too far.
Whatever the reasons and the motives, without the hope of a mill, Gunns are stuffed so they have to keep pretending.
In short, Gunns have done what they had to to keep their heads above water (at the fairly minimal cost of $3m. a month).
Once the shares are relisted on the ASX we shall see if Gunns have done enough to keep the wolves from the door.
Gunns have just posted their yearly (unaudited - are they having problems with an auditor?) result and it shows a loss of $355m. as opposed to a profit last year of $28m.
They are still talking up the pulp mill and still saying they are going to start in August. Just 5 days to go - the permits expire on 30th
August. The shares are still not relisted with the same excuse as before - negotiations with the State government.
With a week to go until the permits MIGHT expire, the arguments are cranking up. It's difficult to see how a court could come
to any other conclusion that the project has not been substantially commenced. In fact Gunns are still saying that they will
start this week. But how can you substantially progress a $2.5bn. project in a few days? Gunns needs to persuade shareholders
that the project is still a goer otherwise, when the shares are relisted on Thursday, it could be armageddon.
To delay your full year results suggests that they are being sexed up for market consumption because otherwise things as they stand
may not go down too well! Gunns says its results will be released next Thursday and that hopefully their shares will be
listed again. It all sounds bad news for shareholders. They also say that the 'compensation' will be put towards the pulp mill
project - should pay for a few shovels!
In today's Hobart Mercury Gunns are reported to have said that the timing and amount of 'compensation' for giving up
their native forest concessions could affect their ability to build the pulp mill. That's all cobblers of course as
even $106m., which they were originally claiming, would only disappear in to Gunns' debt black hole. But it could mean
that Gunns are preparing to blame the State government for the impending project demise. No tenders have been let yet
with only a week and a half left before permits expire. Meanwhile, the shares remain suspended and the longer that goes on,
the more likely it is that they will never come back and Gunns, and the pulp mill, will be dead.
Gunns obviously believes it will need to start this month or the permits will expire as, in today's Examiner (Gunns' main
propaganda mouthpiece), they say they will start construction in August. They've got 2 weeks - why have they left it so late?
Isn't it more likely that they are
trying to coax money out of the State government for their native wood contracts? We shall see but meanwhile, another supplier,
this time in South Australia, has stopped supplying Gunns with timber because of unpaid bills.
An article in the Tasmanian Times has chronicled the reasons for Gunns' collapse from being one of the top 100 Australian companies
to one that is fighting off liquidation. The main reason is of course the fatal and stupid decision to build the pulp mill at
Longreach in the Tamar valley, potentially blighting the lives of 100,000 residents with smell and pollution, instead of the remote
site at Hampshire where it would affect hardly anyone. This has been the main argument in this website all along but Gunns'
management and the State Government have ignored all the warnings and adverse public reaction and tried to bully their way
towards building the project. Having said that, it is now the opinion of this commentator that Gunns have shown such bad faith
with their lack of community consultation, their attitude to local residents, their terrible treatment of local contractors,
their cheating and lies, that they should not be
allowed to run anything more complicated than a sawmill. There is now a suggestion that even if Gunns fails to start building
the project by the end of August (looking increasingly likely), their permits will not expire as they have made substantial
progress on the project! - If so it will be yet more CHEATING, SUBTERFUGE AND LIES, and this time new Gunns' CEO Greg L'Estrange will be implicated as well.
Tasmanian Times
The forestry agreement states that NO money from the Federal Government will be used to advance the pulp mill. And it appears that
Gunns will not be getting any of the cash from the agreement but will rely instead on negotiations with the State Government for
the native forest buy-back. It remains to be seen if Gunns have the cash to make the substantial start in August to keep their
pulp mill construction permits valid. The shares remain suspended for the present until the situation is clarified.
The forest agreement has been signed with over $80m. being spent on compensation to contractors affected including Gunns. But the amount
Gunns are getting will not be revealed. So, Gunns may well stagger on for a few more months and there might be a hole dug in the
ground at Longreach to keep the permits going. If I were a contractor for this work I would want payment up front!
All sorts of rumours are circulating from: Gunns are about to go bankrupt; Gunns will get a large payout from the forestry agreement signed this
weekend; Gunns have a venture partner and are about to announce a capital raising to fund their half of the mill. The most likely
explanation is that Gunns are hoping to get a promised payout this weekend and avoid going in to administration - for the moment.
Gunns reason for requesting a trading halt is because an announcement is expected soon on how much 'compensation' Gunns will
receive in the forestry agreement. Their shares have tanked in the last two days losing 20% of their value and it could be to stop
the precipitous decline. Gunns new Bell Bay sawmill, virtually their only source of cash-flow, has been halted through lack of
wood because Gunns are behind with payments. Greens MP Kim Booth
has said he will try and bring down the state government if they give money to Gunns. High stakes.
According to today's Examiner, the federal government are refusing to have anything to do with any compensation to Gunns for
giving up native forest contracts. That means the state government will have to provide the cash which will go down like a lead balloon
with the electorate. If there is no compensation then the Triabunna chip mill will close. And could it be that Gunns are saying
'no compensation, no pulp mill'? Of course, the compensation would not pay for a pulp mill, most of it will just disappear into
a debt black hole but it might pay for the start required to keep the permits alive. The tiny brains of state government ministers will
be sorely taxed over the next few days.
The union negotiating with Gunns about wages for pulp mill construction workers has said that Gunns are trying to get away with
wages lower than those paid on the mainland and that negotiations that had been going on for a year are in stalemate. Construction
workers' wages in Australia have boomed with the mining boom. The Australian reported last week that only one out of twenty
projects worth $2bn. or more ended under budget so it is likely the pulp mill project will cost at least $3bn. maybe more.
As July ends and no work has been done yet on site, Gunns have 31 days to make a substantial start on the project or their permits
will expire. Gunns have been advertising on TV and this could be a last ditch attempt to sway public opinion in their direction (to
try and get a joint venture partner on board)
or else it could just be for the Government's benefit - to show they are still serious about building the mill and a generous buy-out
of their native forest harvesting rights would help! August should be an interesting month - Will Gunns spend $30m. that they haven't
got to keep their pulpmill proposal alive? Are Gunns waiting for a final verdict from potential partners? It seems unlikely after
all this time. We shall see.
The purchase contract states that the Triabunna woodchip mill cannot reopen until the forestry deal is completed to Gunns' satisfaction. In other
words until Gunns receives adequate funds from the Government to buy back their native wood quotas. Gunns are playing hardball
with the Government and the rest of the forest industry and we can now see why Gunns sold to the environmental consortium for $6m. less than
they would have got from forest interests. Meanwhile the forest unions are saying they will not sign the agreement
unless the woodchip mill is reopened - a chicken and egg situation!
Gunns' CEO Greg L'Estrange denies that Gunns are short of cash. Well, he would, wouldn't he? Gunns are selling down everything they own to try and stay afloat.
There is a large debt due at the end of this year as well as other short-term debts. Gunns will be hoping for a generous buy-back
payment from the Government for exiting native forest. Anyone who does the sums knows that Gunns are in deep financial trouble and
may not survive for much longer in their present form. Even if a joint venture partner miraculously appeared at this late stage, it is
doubtful Gunns could raise their share of the cash. No Australian bank is interested because they know there will be a campaign
against them. Gunns is the most unpopular company in Australia after they, with the help of the State Government, rorted the local planning
scheme to get their pulp mill approval. They still have not assessed the effect of emissions on the the Tamar valley's closed airshed or the odours
or the effect on inshore waters. There has been no risk analysis and the economic analysis was benefits only. It does not comply with
the Equator Principles. Gunns have sacked most of their
pulp mill team, have sold FSC plantations they will need to feed the mill and have, according to some sources, stopped maintaining the (non FSC) rest.
The project is deeply unpopular locally and there will be major disruptions if the project actually proceeds. The pipeline route is
uncertain and subject to legal action. Gunns also face a shareholder action and a possible claim from disgruntled contractors.
Gunns have not informed the ASX that they intend to start work on the site at the end of July.
If they did and it didn't happen they could be in trouble. Gunns' estimate of the cost of the mill is now two years old and it is now likely
to be nearer $3bn.
According to Gunns' CEO Greg L'Estrange, Gunns are setting out tenders for earthworks at the Longreach site so they can make a
substantial start before the permits lapse at the end of August. They've left it rather late. Are they going to find firms that can start at a drop of a hat?
Also, the Winter weather has turned the site into a quagmire. It all seems rather unlikely. Meanwhile L'Estrange is rushing around
all the pulp mill companies that have previously rejected the project trying to get them to change their minds. He knows that Gunns
have no hope of building the mill on its own. If he doesn't get any interest by August will he dare risk wasting $30m. of shareholders' money on
starting a project that will probably fail? We shall see. If not, it will all be over.
The Triabunna woodchip mill has been sold to a tourist consortium for $10m. dashing the hopes of the forestry industry. Gunns has
obviously lost patience with the dubious dealings surrounding the sale. Good for them! Also, Gunns announced that their Launceston
headquarters would be sold to Bunnings and that they are negotiating with Forestry Tasmania to end their wood supply agreements.
Gunns have to make a substantial start to the pulp mill by the end of August or the permits will expire. In order to make a 'substantial start' by the
end of August then activity on the site would need to begin by the end of July. At a meeting at the site yesterday Gunns claimed that they will make
a start at the end of July. So Gunns are trying to find a way to keep the permits alive. They have no hope of making substantial progess on a project
that will cost at least $3bn - probably a lot more - but they are going to dig a few holes in the ground and then claim that they have made a substantial
start. Gunns are slowly going broke and need the myth of the mill to prevent a final collapse. A hand-out by the Government might save the company but
they will still have no hope of building the mill. But they will have no hope of a hand-out if they admit the mill is dead.
Gunns have announced that the ANZ Bank have covered their $55m. repayments due today taking the Bell Bay sawmill as collateral.
Also the Government has announced that it will lend the money for the purchase of the Triabunna chipmill but this could be in doubt
as Timber Communities Australia involved in the forest agreement has indicated it is not satisfied and is not going to sign. Gunns
indicated that the sale was conditional on a satisfactory forest resolution. Gunns and the rest of the timber industry seem to
have fallen out but Gunns still owns assetts that the industry needs if it is going to continue. Gunns will therefore be holding
out for adequate compensation. Gunns are conducting an on-site briefing session on July 6th for local businesses interested in earning money
from the pulp mill construction which they say will begin at the end of July. Could this be an attempt to impress the State
Government (who seem to have few braincells between them) to persuade the Federals to give Gunns massive compensation to keep the
company afloat? Once Gunns admit that the
project is all over they can kiss goodbye to any handouts.
The latest forest agreement has been released, mistakenly it seems, as it was then withdrawn. It needs a lot of Government money
to proceed and as both Federal and State Goverments are strapped for cash, it is far from certain it will proceed.
The news was welcomed by Gunns but there was no mention
of the pulp mill in their release. It's difficult to see how it will make any difference as the cost of the pulp mill must be close
to $3bn by now and Gunns' compensation, if they get any as the forest access was gifted to them anyway, would hardly be more
than a few tens of millions.
Gunns have potentialy sold their 'Green triangle' plantations providing the buyer can come up with the cash. The deal will go
through by 31st October. The amount is $107m, Gunns probably hoped for better, and it will be used to retire debt. The plantations
were values at $250m so it has resulted in quite a loss. If the same discount was applied to Gunns' Tasmanian plantations, they
would fall in value by $400m.
Does this mean the banks will have nothing to do with it as the mill is unlikely to make a profit?
Gunns are in survival mode and need to raise over $50m by June 30th to repay a loan. The only way they are going to do that is if the
forestry agreement currently being negotiated allocates some compensation to Gunns for giving up native forest logging. That could occur
in the next couple of weeks and keep Gunns alive - for a bit longer anyway. However, how likely are the Federal Government to give Gunns
money that will almost certainly just disappear in to Gunns
' debts? We shall see. Gunns now have 11 weeks to make a substantial start on the
pulpmill or the building permits will lapse. Gunns and Forestry Tasmania appear to be each other's throats at the moment so
co-operation between them has ceased. Forestry Tasmania will do their best to wreck any forestry agreement and the Government seem
unable or unwilling to reign them in. The share price is now down to 25 cents. The end could well be nigh!