wi to the rescue at Gunns
Earlier in the week the news broke that a New Zealand-born billionaire was in negotiations with Gunns to buy a substantial part of the Tasmanian-based timber company. Gunns shares went into a trading halt on Tuesday and on Wednesday morning the company announced that they have agreed on commercial terms for the introduction of a AU$150 million investment from the Richard Chandler Corporation (RCC). In conjunction with a rights issue to existing shareholders, the recapitalisation aims to raise up to AU$280 million.
The recapitalisation, combined with the ongoing asset sale process, will leave Gunns effectively debt free, providing stability for the finalisation of the financing structure for the Bell Bay Pulp Mill. Under the proposed recapitalisation, RCC will invest $AU150 million in Gunns through a share placement and bond issue.
A further AU$130 million is proposed to be raised in a pro-rata renounceable rights issue to existing shareholders, offering 1.3 new shares for every one share at $0.12 per share. Gunns will seek shareholder approval at an Extraordinary General Meeting for the transaction, which will see RCC hold approximately 39 per cent of Gunns shares following the recapitalisation, if all shareholders take up their entitlement. The EGM is expected to be held in mid-April, with the transactions, if approved, completed in May 2012.
Gunns Managing Director Greg L’Estrange said the new capital would provide certainty and stability for the company to finalise the financing structure for the construction and operation of the Bell Bay Pulp Mill. “In combination with the asset sales program, the proposed recapitalisation will facilitate a further significant reduction in company debt,” Mr L’Estrange said.
“This will provide the platform for us to proceed with our core strategy, based on the softwood sawmilling business and the utilisation of our extensive Tasmanian hardwood plantation estate within the proposed Bell Bay Pulp Mill.”