Ann: Becoming a substantial holder , page-14

Lordolean

Interesting question. I haven't crunched the numbers yet, but when I saw they were going to flog off not only the GT pine estate and land, but essentially the whole of Auspine as well (that's how I interpret "selling softwood saw milling" business), my quick mental arithmetic said that the numbers had suddenly moved significantly in the right direction.

As a saw miller from way back, I had never entertained the idea that l'Estrange would walk away from all saw milling. That's the big left-field surprise by my book.

Essentially, they propose selling everything apart from a 20% "equity" in the "hardwood plantation assets". Obviously they need to have their foot on the wood so it's secure for the mill. However, that 20% could come relatively cheap: does it include the land the plantations are growing on? No. Is it GNS owned wood now? Not much; most of it now belongs to MIS growers - then you could be talking mostly about a 20% cut of the RE's share of the harvest proceeds - say 20% of 10%.

The whole Auspine business, including land and the ex-FEA mill (built for $80M), but excluding the softwood plantations bought by GMO a couple of years ago, could be worth $250M. Just that alone goes close to clearing the debt.

Add to that the Tassie land and 80% of the plantations, hardwood saw mill business, and the distribution business in the capital cities, then I reckon it's going to get a fair amount of the mill built.

As a do-or-die strategy, I reckon the GNS board believe that a substantial amount of work done on site will be what's needed to get the JV candidates convinced and over the line. The fear of missing out.

Look at the company that's left - it's Gunns in name only: they might as well rename it Bell Bay Pulp Ltd because pulp will be the only game in town.

I reckon l'Estrange/Board have crunched the numbers. They wouldn't be so stupid not to have.

I have always understood that project financing has always been available from day one - partner or no partner. It's always been a matter of what it would cost and the project rate of return is so good why would you give away more than you need to. The more it's de-risked, the lower the cost and the longer the queue of more conventional lenders.

Lets face it. Tassie's a basket case without the mill. Correction, it's a basket case now - it needs the mill to reverse out of it. The State Govt has no option but to support it, and support it hard.