Business SpectatorBy a staff reporter Banking sources say ANZ...

Business Spectator


By a staff reporter

Banking sources say ANZ will not provide funding to timber group Gunns Ltd for its controversial Tasmanian pulp mill project, citing tight credit conditions.

While the bank told Business Spectator that no decision had been made, sources say Gunns' main banker for 22 years had told the group it would not fund the project in the current credit conditions.

The Tasmanian group, with a market capitalisation of $750 million, is seeking funding worth $2 billion to build a pulp mill in the state's Tamar Valley, after originally seeking funding worth $1.5 billion.

Media reports have recently suggested that Gunns was shopping around for cash and had recently approached Macquarie Bank.

Gunns reported a first half net profit of $14.86 million, down 27.6 per cent, in February.

At the time it reported the results, the company said investment in its Bell Bay pulp mill project was continuing and confirmed that the budget had been finalised at $2 billion and agreements reached with John Holland Pty Ltd and MacMahon Contractors Pty Ltd on the costing of the scope of works for civil and construction activity.

As at February, the company had incurred around $58.3 million in capital expenditure and had expensed costs of $27 million for the project and said that it was progressing in talks with the proposed banking group for its debt facility.