Gunns reduces debt with timber sale, as pulp mill hearing set for next year

Gunns has sold 33,000 hectares of softwood plantation in the Green Triangle region of South Australia and Victoria to GMO Renewable Resources in a bid to cut its debts, which are believed to be around $740 million.Gunns said it expects the sale to eventually gross as much as $175m for the company, just two months after it announced it had raised $336m from an institutional share offer.

The purchased timber represents roughly 75% of the softwood plantations owned by Auspine, a subsidiary of Gunns since it was acquired in February of this year.

“Under the arrangement, Gunns will retain the freehold land associated with the standing timber,” the company said in a statement to the Australian Stock Exchange. “Future harvested timber associated with this plantation area will be acquired at a market value from GMO Renewable Resources, with the harvest profile of the plantation reflecting a 28 year rotation.”

Gunns manages over 200,000 hectares of plantations, consisting of approximately 150,000 hectares of hardwood plantation estate in Tasmania and roughly 50,000 hectares of softwood plantation estate, which are predominantly in South Australia and Victoria.

Challenge to Tasmanian government’s pulp mill approval now set for next year

A legal challenge to the Tasmanian Government’s assessment of Gunns' pulp mill proposal has been set to be heard in the Supreme Court early next year. The case will be heard in either March or April.

Environment Tasmania, the state’s major environment body, and three business operators in the Tamar Valley are challenging the state government's refusal to give reasons for approving pulp mill permits, as well as its controversial decision to block compensation to parties affected by the mill.

Part of the Pulp Mill Act prevents landowners from receiving compensation if they are adversely affected by the planned mill.