bank gets out of gunns

Lordy--I believe this is the article from the Hobart Mercury.It does note Colonial in the article.

MICHAEL STEDMAN

June 04, 2010 08:25am

GUNNS Limited has lost another major backer, with the Commonwealth Bank revealing it has bailed out of the company.

Australia's largest bank informed the stock exchange yesterday that it was no longer a substantial shareholder in the timber company.

The CBA and its fund management subsidiaries have been selling out of Gunns stock since the company revealed a shock 98 per cent half-yearly profit drop in February.

Most analysts predict Gunns will record a modest profit of around $10 million for the full financial year, well down on last year's $56 million.

Trading intensified late last week as Gunns' major backers put pressure on John Gay to resign as company chairman.

CBA subsidiary Colonial First State Investment was behind much of the selling, resulting in the offloading of more than 11 million shares.

Local financial analyst Matthew Torenius, of Shadforths, said the CBA was the latest long-standing supporter to abandon the company.

"I definitely think that after the half-yearly profit result, the major fund managers lost faith in what was going on in the company," Mr Torenius said.

Trading has settled in recent days, with 6.4 million shares changing hands yesterday, down from a frenzied peak of 120 million traded last Friday, the day after Mr Gay resigned.

The share price remained steady at 45c yesterday.

However, with more than 441 million shares, or over half the company, changing hands over the past month, Mr Torenius predicted a major player could emerge soon.

"We are probably going to see someone taking a strategic stake in the company rather than a full takeover at this stage," Mr Torenius said.

"They will want to give the management team a chance to prove themselves.

"The company is still in a very tough financial position and they will need to continue with asset sales to free them up before they can concentrate on the pulp mill."