Media reports March 2010

30 March 2010 The Launceston-based timber company has appointed advisers to fast-track a restructure of the business into four separate entities - the pulp mill, plantations, sawmilling and its other assets including Mitre 10, wine and construction. Gunns would be looking at all options following a 98 per cent profit drop for the first half and continued struggles to finance its controversial pulp mill. Examiner

30 March 2010 Gunns has come under scrutiny from the Australian Securities Exchange over the late lodgement of director Robin Gray's share purchase details. Mr Gray indirectly bought 100,000 shares at $55,000 in an on-market trade on February 26 but the company did not notify the ASX until March 11, six days later than the listing rules allow. The Gray transaction query was the second time in just over a month that Mr Chapman has been asked questions by the ASX. In late February, the company was questioned over when it became aware that its half-year profit drop would be more than 98 per cent. Examiner

29 March 2010 The chairman of Gunns, John Gay, is facing fire on several fronts. His position and that of a couple of his fellow directors, former Tasmanian premier Robin Gray and Richard Millar, have been under the microscope from governance experts, the future of Gunns' proposed pulp mill is under renewed threat and the company's earnings are under pressure. As an investor, the slump in the December half net earnings from $33.6 million to less than half a million would be of biggest concern. From an environmental perspective, the biggest issue would be whether the pulp mill in the Tamar Valley can be finally killed off. For those with an eye on corporate governance the fact that Gay and some of his associates have been around for too long and have too much power is a concern. It's a fair bet none of Gay's critics were too impressed by how as chairman he sold 3.4 million shares in December - only weeks before the books were lined off on the disastrous half profit. Gay avoided paper losses of about $2 million. Stock and Land

26 March 2010 Embattled forestry group Gunns plans to sell eight Mitre 10 hardware stores to cut debt. The sale has been announced as the company comes under pressure from shareholders following a slump in earnings and its shares. Stock and Land

26 March 2010 Pressure is growing on Gunns to rebuild its poor Japanese market with sustainably certified woodchips, bringing closer an end to old-growth logging in Tasmania. Gunns' main woodchip customers this week consulted industry and environment groups in Tasmania as a step towards their own Forest Stewardship Council certification in Japan. The council said that to achieve the FSC green tick for its chips, Gunns would have to exit disputed high-conservation-value forests. Business Day

26 March 2010 IMF (Australia) is considering whether there may be grounds to launch a class action against Gunns for failure to comply with its continuous disclosure obligations. The market got a nasty shock on February 22 when Gunns reported a 98 per cent plunge in December half earnings to a mere $400,000. Moreover, the fall was due to operational factors rather than adjustments for extraordinary items, as the operating EBIT fell 88 per cent, from $69.3 million to $4.8m. The ASX requires notification if the profit is expected to vary by more than 10 per cent to 15 per cent and there had been no such notification from Gunns. The displeasure of some institutional shareholders is heightened by the fact that Gunns raised $145m last year through a one-for-four non-renounceable issue at 90c, a discount of 21 per cent to the then share price of $1.145 without any warning of a possible sharp fall in first-half earnings. Adding to the dissatisfaction is that early in December, only weeks before ruling off the books for the half year, the chairman John Gay raised $3.1m through the sale 3.4 million shares, more than 20 per cent of his holding, at an average 91c a share. Gay's timing means that he received $1.22m more than if he were to sell at the current price. If Gunns were to be a breach of the continuous disclosure requirements it would raise the issue of whether Gay, as an insider, traded when he was in possession of material price sensitive information that was not generally known to the market. The Australian

24 March 2010 Tensions have begun rising over the Tasmanian forestry industry as the Greens are likely to emerge with the balance of power in a hung parliament. Stock and Land

24 March 2010 Opponent of Gunns, prominent businessman Geoffrey Cousins is in talks with several of its major shareholders about ending old-growth logging in return for a "social licence" and green accreditation. "The view of some (shareholders) is that a complete review of the pulp mill project is required," Cousins said. Gunns' Japanese woodchip customers are increasingly demanding FSC product as part of a global shift in demand towards "green" wood products. The Australian

22 March 2010 Gunns shares have lost nearly 50 per cent of their value in the past month and are trading near record lows at 54¢ a share after a disastrous half-year result. This compares with a 10-year high of $4.38 in January 2005. The stock is considered high risk and only for the very patient investor. There could also be ramifications for Gunns and its pulp mill quest if the Labor government is voted out. Stock and Land

19 March 2010 Chairman John Gay has come out swinging as he seeks to stave off demands from institutional investors that three long-term Tasmanian directors resign, presumably with a view to constituting a new board with a strategy that doesn't involve logging high-conservation forests or building pulp mills. Also destabilising the company are rumours circulated by environmental interest groups claiming Gunns' finances are in such a parlous state that ANZ is insisting on signing off on all cash outflows. Stock and Land

18 March 2010 Gunns still struggling to find pulp mill investors. Whether it's built may not be in the hands of voters or the government of the day. Financiers, shareholders and investors may have the final say over this hot environmental issue. Gunns is finding it extremely difficult to raise the necessary cash not just because of its controversial nature, but the global financial crisis means investors have been wary and money has been scarce. Locally, the ANZ Bank was initially a key financier but it dropped out in May 2008 under heavy pressure given its own corporate social responsibility policies. ABC PM

17 March 2010 Several of the largest shareholders in Tasmanian woodchip company Gunns have sought the resignation of chairman John Gay, angry he sold shares not long before its disastrous first-half earnings result. Sources said some angry institutional investors flew to Launceston about 10 days ago to confront Mr Gay about the company's poor performance and its strategy. Its shares are at near 10-year lows. Stock and Land

16 March 2010 John Gay has launched a desperate public rearguard campaign against demands by institutional investors that the three long-term Tasmanian directors of the company resign. The outcome of his bid to fend off concerns over corporate governance issues by attempting to rally parochial political support for the Tasmanian directors is likely to be a pivotal development in Tasmanian environmental politics. Gunns business strategy is in tatters: it’s much touted proposal for a pulp mill can’t attract joint venture partners or funders, Japanese woodchip customers are insisting wood supplied to them be certified by the Forest Stewardship Council, the company’s woodchip mills have been subject to rolling shutdowns over recent months and the company has a reputation so toxic it makes tobacco companies look saintly. Compounding this are the long-standing concerns about corporate governance. The pulp mill proposal has gone nowhere other than frequent announcements that finance and partners will be finalised soon.

10 March 2010 Shares of timber giant Gunns are trading at 10-year lows after the company revealed a poor first-half result and a complex restructure. Gunns share price is trading around 56¢ a share, compared with a 10-year high of $4.38 in January 2005. The value of the company has declined by $250 million since the day before it reported its dismal result on February 22. Stock and Land

8 March 2010 Shareholders in Gunns have every right to be upset at chairman John Gay. Gay has been paid more than $2.4 million over the past two years, during which time the company’s share price has fallen from almost $3 to less than 70 cents. In the recent reporting season, Gunns reported a measly $400,000 profit for the six months to December 31, 2009, down 98 per cent on the previous corresponding period. The share price fell a gut-wrenching 22 per cent on the day of the announcement. Business Day

3 March 2010 Hundreds of thousands of hectares of managed investment scheme plantations may be almost worthless. And the fate of Gunns Forestry may be tied up in the MIS mess. The former Great Southern blue gum plantation estate lacks an environmental accreditation sought after by the all-important Japanese woodchip market. Gunns has become the responsible entity for 150,000ha of the Great Southern plantations in the "Green Triangle" on the Victorian and South Australian border and says many of the trees are bound for its planned Tasmanian pulp mill. Gunns is yet to source finance for its mill and there is speculation the company has gone cold on the project and only continues to push for it publicly in order to inflate the value of its plantation estate. It owes just shy of $800 million and lists the book value of its plantation assets at $1.2 billion, but analysts say the trees could fetch far less. Meanwhile scandal surrounds Gunns' Tasmanian plantations and exports of the tree Eucalyptus Nitens, as a toxin in the leaves of its trees have been matched to a toxin in drinking water which kills human cells. Weekly Times