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Gunns closer to control of Great Southern

Posted on November 24, 2009, 8:08am and updated on November 25, 2009 at 10:09 am

Gunns appears set to take control of 42,000 hectares of Green Triangle plantations established by failed agribusiness Great Southern.

The Tasmanian timber giant has reached the final stages of negotiations to acquire the assets after previously building a strong presence in the region by buying Auspine and starting development of a major woodchip export terminal at the Port of Portland.

Great Southern receiver and manager Tony McGrath of McGrathNicol has told investors various other parties withdrew or revised offers to become the new responsible entity for the collapsed company’s forestry managed investment schemes over recent months.

He said a final agreement was now to be negotiated with Gunns and presented to investors, outlining how the schemes could be managed and assets transferred.

Mr McGrath said key information would be provided to investors within a fortnight and they would then be called to meetings to vote on the Gunns proposal.

Gunns chief executive Greg L’Estrange said the company would make a compelling offer that would provide certainty to Great Southern grower-investors.

“Our proposal will cause minimal disruption to the operation of the schemes, supported by Gunns’ strong financial position and experience in the management and operation of plantations under managed investment schemes,” he said.

Under the proposal, Gunns as responsible entity would manage the plantations and receive a percentage of net proceeds from the harvest of pulpwood schemes planted between 1998 and 2006, potentially also including a 2007 project.

The estate is expected to generate an annual woodflow of up to one million gross metric tonne through the port facility.

“The proposal offers significant advantages for growers,” according to a statement by Gunns issued to the stock exchange.

“It will allow growers to retain an interest in their woodlot during the life of the pulpwood schemes and preserve growers’ ability to receive a portion of the proceeds of the sale of their trees following harvest.”

The sale would also prevent the schemes being wound up and sold-off, potentially delivering less than full value to growers.

Gunns is also moving towards signing a sale agreement to acquire assets from Great Southern worth $8.7m, including property, plant and equipment, water licences and insurance payment receivables.

Mr L’Estrange said the company would fund acquisition of the assets from cash at hand and existing facilities.

He said Gunns would also make offers of employment to forestry management personnel of the pulpwood scheme and gaining rights to the estate would provide highly complementary hardwood operations resulting in a significant increases in scale and access to additional plantation timber.

Growers meetings to vote on the proposal are proposed for December 23, meaning uncertainty in the forestry sector could be resolved by Christmas time after a year that also saw Timbercorp collapse, resulting in managed investment scheme plantations being sold off.

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