Media reports April 2010

29 April 2010 The Tasmanian Environment Protection Authority is gathering evidence to see if it should prosecute the timber company Gunns for breaching national air quality standards. On the day that Gunns lit the fire, particle levels were well above the national standard. The breach continued the day after the burn off. If found culpable for polluting the air Gunns could face a fine of up to $300,000. Phillipa Stanton is one of many locals who says smoke from the fire drifted down to the nearby coastal towns of Burnie and Wynyard. (She said) The wind was variable and the smoke suddenly would come down and blanket the whole house. Visibility was quite limited, down to sought of 500 metres at most. And when I went out to get the mail the smoke was so severe that I was choking and coughing it brought on a sort of asthma attack; had to go in the house and seal the house up for the next two days. The smoke was a nasty hazard, even the cat was sneezing. There are about 200 planned burn-offs in Tasmania every autumn. ABC

28 April 2010 Gunns' two biggest shareholders have criticised a management shake-up at the forestry group, saying it was unacceptable for founder and chairman John Gay to assume control of a newly created subsidiary. The Australian Financial Review reports that under mounting pressure from investors to sack Mr Gay, Gunns last week said he would step down as chairman and take on a the position of chairman of a newly created subsidiary, Southern Star. But Charlie Lanchester, a portfolio manager at Gunns' single-biggest shareholder Perpetual, said it wasn't acceptable for Mr Gay and another director, former Tasmanian premier Robin Gray, to retain close links to Gunns. "The company and its shareholders will be better served by fresh leadership at the board level." Queensland Country Life

27 April 2010 Gunns said a new unlisted company, Southern Star Corporation, would be set up with the purpose of achieving financial close for Gunns' proposed $2.5 billion pulp mill at Bell Bay in northern Tasmania. Southern Star will own Gunns' pulp mill project and Tasmanian timber plantations. Gunns will retain at least 51 per cent of Southern Star. It plans to sell the bulk of its native forest plantations and "non-forestry assets", which include a network of Mitre 10 hardware stores, a construction division and the Tamar Ridge Estates winery. Timo Piilonen, who between 2004 and 2008 was responsible for the construction and operation of Metsa-Botnia's Fray Bentos pulp mill in Uruguay, has been appointed pulp mill project director of Southern Star Corporation. Adelaide Now

25 April 2010 Accounting for Dummies — Lessons from the Forest Industry by John Lawrence. The suggestion in the title is that accountants are smarter than the average. Most aren’t. Accounting is essentially about plusses and minuses. Not exactly rocket science. But much of what is presented in financial statements confuses rather than promotes understanding, deliberately so at times, unfortunately not an uncommon occurrence amongst professions. The following is an attempt to outline the lessons, 17 in total, from the financial statements of Great Southern, Timbercorp, FEA, Gunns and Forestry Tasmania, by presenting a common sense interpretation of some of the more significant features, and perhaps provide the new government Minister with an accounting analysis of the current forest industry, lest he thinks it is in suitable shape to provide a springboard for the future. The industry, FFIC and the Pulp and Paper Taskforce, blissfully continue to ignore the structural flaws in their industry, and with a nerve unmatched by anyone except perhaps Wall Street bankers keep asking for more assistance to overcome problems which are largely of their own making. Tasmanian Times

24 April 2010 Two of the most controversial figures in the Australian forest industry, Gunns chairman John Gay and director Robin Gray, are to quit its board in a reshuffle. Their departures follow institutional investors' anger over Gunns's dismal recent performance (98 per cent first-half profit drop), and intense lobbying against them. Gunns earned a reputation for bruising conflict under the present board. Its hard line climaxed in the Gunns 20 case, in which the company claimed $6 million against environmentalists for an 'over-arching conspiracy' against them. After five years the case was finally settled, with payouts to most defendants, and costs to Gunns totalling at least $3 million. In February the board said uncertainty over the pulp mill's financing had to end, but yesterday's statement gave no further sign that Gunns was closer to the money. Business Day