Media Reports May 2010

31 May 2010 Shares in Gunns have risen sharply in the wake of the departure of chairman John Gay and amid speculation the company could become a takeover target. The Australian Financial Review on Monday suggested that Chinese firm Asia Pacific Resources International Ltd could be interested in securing Gunns' timber supply. Other companies that could be interested included Nine Dragons, Asia Pulp & Paper, Hunan Tiger Paper and Chenming. Morningstar head of equities research Peter Warnes said that when Gunns shares were under 30 cents, they were "wildly undervalued" given Gunns' forestry assets. "The problems with the management or board have disappeared with John Gay's resignation or early retirement," Mr Warnes said. Business Spectator

28 May 2010 Gunns chairman John Gay finally capitulated to shareholders, quitting all posts and raising deep doubts that his company's controversial Tasmanian pulp mill will be built. Mr Gay failed in his attempt to fend off investor pressure by shifting into a Gunns subsidiary, Southern Star, to run the mill project. He resigned from it, as well as the main Gunns board, which he had previously promised to leave by November. Mr Gay had been resisting pressure for months but the final act came this week when major institutional investors sold off large parcels of Gunns shares and its price spiralled down from 38¢ to a low of 26¢. Business Day

25 May 2010 Gunns share price has plunged about 25 per cent today. After closing at 35 cents a share yesterday, Gunns shares closed at just 26.5 cents on a volume of more than 41.2 million shares - down 8.5 cents a share after opening the day at 34 cents. Today's fall follows yesterday's announcement that the timber company had sold its retail hardware stores for $40 million to John Danks and Son. Examiner

24 May 2010 Woolworths has added more stores to its hardware chain by agreeing to pay $40 million to acquire Gunns’ five stores in Tasmania. It will also acquire the Becks Timber & Hardware business. Business Day

19 May 2010 Gunns shares dived to their lowest in a decade after the board of IMF (Australia) Ltd announced it would fund a class action against the company. Gunns shares were the worst performing on the benchmark ASX 200 share index for the day, losing 4 cents or 9 per cent, to close at 40.5 cents. The company's shares haven't been this low since July 2000. IMF said in a statement to the stock exchange that it proposed to fund claims current and former investors have against Gunns, relating to 'alleged misleading or deceptive conduct and alleged breaches by Gunns of its continuous disclosure obligations' between August 31 2009 and February 22 this year. Earlier this month, former Tasmanian premier Robin Gray retired as a director of Gunns after pressure from institutional investors. Founder and chairman John Gay drew widespread investor ire after he disclosed the sale of Gunns shares shortly before the company reported a 98 per cent slump in first-half profit. Business Day

14 May 2010 Gunns has made the first move in its bid to restructure the company, advertising a preliminary notice for the sale of 28,000 hectares of native forest blocks. The native land sale is a small component of a major restructure that includes the sale of non-forestry assets, such as Mitre 10 and Tamar Ridge Estates. Money from asset sales is to be used to pay down debt and help fund Gunns' 51 per cent-plus stake in its new pulp mill joint venture, Southern Star. Examiner

10 May 2010 The largest shareholders in Gunns are pushing for the removal of directors John Gay and Robin Gray from all positions within the timber empire to help it establish a "social licence". Both men have already resigned or announced an intention to quit Gunns. However, the two biggest shareholders - Perpetual and Concord Capital - are understood to be demanding they also quit the company's subsidiaries. In particular, there is anger that Mr Gay, who has presided over a share and profits slump, is to be chairman of a new subsidiary, Southern Star, which will hold Gunns' local plantations and pulp mill project. A downturn in demand for woodchips from Gunns' Asian customers, who are increasingly demanding FSC certification, has forced the shutdown of the Gunns Long Reach mill for three weeks and its Triabunna and Burnie mills for two weeks. Gunns and industry sources dismissed an overseas report suggesting Sodra had withdrawn from pulp mill discussions. Australian

8 May 2010 Forestry contractors had been forced to sack half their staff in the past year and another three weeks of shutdowns at Gunns' woodchip mills would be the final nail in the coffin for many businesses, the Tasmanian Forest Contractors Association said yesterday. The silviculture industry had been reduced from 700 jobs to 150 in the past year while TFCA executive officer Ed Vincent said the state's 120 contracting companies had reduced their workforce by half from about 800. Advocate

7 May 2010 There is nothing but storm-clouds on the horizon for the Tasmanian forest industry, an analyst says. Gunns Ltd has confirmed it will temporarily shut its three Tasmanian woodchip mills from May 31 to "manage stock levels". Pulp and paper analyst Robert Eastment said an added concern was that Tasmania would soon face stiff competition from the new owners of Timbercorp's expansive forestry assets in South Australia and Victoria. Mercury

6 May 2010 Former Premier Robin Gray retired as a director of Gunns Limited yesterday but will will stay on as a director of Southern Star Corporation – the company hoping to develop the $2.5 billion pulp mill at Bell Bay with a joint venture partner. Mercury