Report on Gunns AGM 30 October 2008 by a TAP insider shareholder
Security for the annual general meeting was high. All meeting goers were vetted at the boom gate. Police were present with the paddy wagon and about 50 members of TAP greeted shareholders with a song as they passed through the gates.
The AGM was held in a room that had the heating turned up very high. No recording devices were allowed into the meeting so notes were scribbled down as the meeting progressed. CEO John Gay took the floor and responded to most questions but did not answer many directly. In the call for apologies, Robin Gray volunteered 'Crikey' (to his own amusement).
Question re uncertainty over the project
'Main reason for the hold up is the opposition of people (whilst purposively looking at those in the room). It's not Gunns holding up the mill, it is anti-progress, anti-development people who are holding it up. (And later in the meeting) 'There are not many protesters against Gunns'.
Questions re negotiations with partners
'Gunns has had positive discussions with joint venture partners.' 'Equity partners are pulp mill operators.' 'Joint venture partner will not take a majority interest, only 20 to 25%.'
Question re decline in shares coinciding with the pulp mill project
'Yes, the anti-pulp mill people have had an effect'.
Question - when will you abandon the mill?
Answer -'never' (to applause). 'We will keep the project on the books as long as it takes'. 'Gunns has confirmed with suppliers that the mill is a goer'. 'It is ready for construction as soon as finance is arranged'.
Question re fast tracking the mill
John Gay denied discussions with Premier Paul Lennon before pulling out from the Resource Planning and Development Commission.
Question re government permit approval process
'Getting the modules signed off is no trouble'. 'The government has shown extreme generosity to Gunns. As shareholderes, you should be happy.'
Question re payments to Andritz (Finnish pulp machinery builder)
'Some money has been paid for long lead items.' 'The contract can just sit there. No equipment has been built.' 'The mill size is locked in.'
Questions re plantations
'Gunns has more plantations in the North East than anywhere else in Tasmania.' 'Gunns is improving productivity whilst working in harmony with the environment.' Carlton Frame (sustainability manager) – 'one third of Tasmania's emissions are being absorbed by plantations. They are being managed in perpetuity, never going to cut them down. Gunns has a neutral or less than neutral carbon footprint. A pulp mill will make that even better.'
Prepared shareholder questions
1) Gunns Manager of Sustainable Resources, Calton Frame said at a recent public meeting (Tail Race Centre) on the pulp mill that the company had completed a risk assessment study of the pulp mill. There is no broad ranging risk assessment study published in Gunns' IIS.
a). Has Gunns since carried out a broad ranging risk assessment of the proposal?
b). If so, has it been done to Treasury standards?
c). Has it been made available to shareholders to assist with investment decisions?
Answer - no answer. Carlton Frame asked that it be taken on notice. No reply has been received.
2) In the current economic climate the pulp mill is completely unviable. When will the Board members recognise the reality of this fact, accept their responsibility both for the loss of company profits, and the drop in the share price, and step down from their position?
Answer - sidestepped
3) Currently, within a 5 km zone of the proposed pulp mill site, house and property sales have already collapsed, directly as a result of the pulp mill proposal, and local residents are already undertaking to protect themselves with a Class Action. This poses a serious risk both to Gunns' future, and its ability to attract financiers. What strategies do the Board have in place to counter this risk?
No record of an answer to this question in the notes.
4) Gunns recently failed to obtain council approval for its pulp mill pipeline easements in the West Tamar. As you are aware, if there is no water supply, then there is no mill. The company has staked its future on the pulp mill project; some commentators have described it as a "bet the company" scenario.
a) How many properties are left to sign?
b) Can the Board advise as to pipeline progress, and on how many kilometres of pipeline easement have been signed over from Trevallyn Dam to the mill site?
Answer - John Gay expressed surprise as to how well the negotiations were going. 'As a shareholder you should understand that this confidential'. 'There are always one or two who might cause problems'.
5) Gunns Ltd claims to be a proud Tasmanian company, but the withdrawal from the RPDC pulp mill approval process has resulted in both Tasmania and Gunns being criticised, and ridiculed, throughout Australia - and indeed the world. Recent revelations in state parliamentary hearings suggest the company was clearly in no position to begin construction within the timeframes John Gay had indicated to the media at the time.
Given also that the head of the RPDC had already identified areas of 'critical non-compliance' within the IIS, was the decision to withdraw from the RPDC process due to an awareness that approval would not be received, rather than misleading and inaccurate timescale reasons?
Answer - none
