Receiver delighted as Gunns timber assets sell for about $25m...

Receiver delighted as Gunns timber assets sell for about $25m

by: REBECCA URBAN
From:The Australian
December 21, 201212:00AM

SYDNEY-BASED New Forests has emerged as the successful bidder for Gunns' timber products business, which includes sawmills at Bell Bay in Tasmania and Tarpeena in South Australia.

The sale price, although not officially disclosed, is understood to be in the range of $25 million to $30m, and includes the sales and distribution businesses.

Sources close to the receiver, Korda Mentha, insisted the figure, although open to a range of calculations, was significantly higher. The sawmill assets were expected to fetch as much as $90m prior to Gunns' collapse three months ago.

Gunns paid $47m last year acquiring the Bell Bay sawmill from the failed Forest Enterprises Australia, which spent more than $70m building the facility.

However, Korda Mentha partner Mark Korda said he was delighted with the sale process, which had attracted dozens of expressions of interest from Australia and overseas. Seven bidders remained when the initial deadline expired in early November, Mr Korda said.

"This is an outstanding outcome for the employees and the local communities of Bell Bay and Tarpeena," he said.

"The business will be in the hands of EXPERIENCED forestry managers with a long-term interest in the Australian timber industry."

New Forests, which manages more than $1.25 billion in forestry assets, including 400,000ha in Australia, the US and Asia, confirmed that it would retain the 380 staff employed in the business, which would continue to be managed locally.

New Forests managing director David Brand said the purchase would allow the integration of the firm's forests with the mills and with the sale and distribution functions.

"This should allow us to be a competitive and high-quality timber supplier, even in the current difficult market conditions," Mr Brand said. "We are long-term investors in Australia's plantation forestry sector and seek to be part of the growth and development of the industry.

"We aim to continue to invest and grow our business in Australia, which, despite the high Australian dollar and reduced housing starts, remains among the most attractive forestry investment opportunities in the world."

Mr Korda said the transaction, which is expected to be completed by the end of January, was a significant step in carrying out the three-point plan set out at the beginning of the receivership, which includes reviewing Gunns' plantation assets to determine a strategy for restructure or realisation as well as the potential sale of the company's pulp mill permits.

Gunns was placed into administration on September 25 after its ANZ-led banking syndicate withdrew its support for the company's long-running recapitalisation attempts.

The banks, which are owed about $560m, later appointed Korda Mentha as receiver.