article in business spectator

http://www.businessspectator.com.au/bs.nsf/Article/Sodra-interested-in-Gunns-deal-report-HT5U9?OpenDocument


Sodra interested in Gunns deal:
Gunns Ltd may have found a business partner to assist in developing its $2 billion pulp mill in Tasmania, with Swedish paper company Sodra saying it would be interested in considering a joint venture.

Gunns, which struggling to get the mill up and running because of financing issues and environmental concerns, has previously approached Sodra about a deal, The Weekend Australian reports.

The Swedish company confirmed to the paper that it might consider a joint venture with Gunns, but did not say if any recent discussions between the two companies had taken place.

Last week, timber industry analyst Robert Eastment said he would expect that Gunns would approach a number of international parties, and used Sodra as an example of a type of company that may be interested.

Other reports said Gunns had approached rival Finnish paper and pulp companies Stora Enso and M-real about possible joint venture partners in the project.

However, according to the Wilderness Society, Stora Enso said that they are not involved with the project, while M-real told the environmental group it had not been approached by Gunns in anyway.

According to reports, Gunns may need to alter its plans to initially rely on timber from native forests to comply with environmental standards applied by Scandinavian firms and thereby win their support.

The timber company is also struggling to secure final government approval for the project, with federal Environment Minister Peter Garrett saying last week that Gunns is unlikely to meet a deadline for providing environmental information for its proposed mill.

Mr Garrett said the company had yet to seek an extension to the October 4 deadline and he had approved just four of 16 modules of the environmental management plan for the mill and had asked Gunns to resubmit nine modules with extra information.

Gunns executive chairman and chief executive John Gay said the mill's financing would not be finalised until the company had received a complete sign-off on the project's plans, the Hobart Mercury reports.

Mr Gay also conceded that the company had underestimated the time it would take to secure approval for the project.

Mr Gay has been the subject of speculation this week, with reports saying the Gunns founder is preparing to step aside as the company's chief executive, but remain as chairman.

Gunns is preparing to launch a rights issue this week, believed to be worth $300 to $400 million, in a bid to boost its books and meet financing requirements.

Last month, the forestry group confirmed to Business Spectator that the pulp mill could still go ahead with European banks moving to invest in the $2 billion project.

Under the terms of the new deal Gunns may still need to inject its own equity cash, and this could prove difficult under tough market