gns - in the news

Interesting insight into the workings of GNS
Todays Mercury

http://www.themercury.com.au/article/2012/09/11/360541_tasmania-news.html

TIMBER company Gunns Limited is continuing to employ its Bell Bay pulp mill project director on $13,812 a week despite conceding the project is "probable not to proceed".

Timo Piilonen was employed in October 2010 on a package worth $718,274 a year as project director Bell Bay pulp mill project.

Cash-strapped Gunns is continuing to operate through "ongoing lender support".

"Timo is still employed because the board only indicated that their level of confidence had changed on an accounting basis," a Gunns spokeswoman said.

"They did not indicate that the mill would not proceed, so Timo ... remains at Gunns as a valuable member of the pulp mill team."

In its preliminary final report Gunns wrote down its $255 million pulp mill investment to $38 million.

The move was an "indication of decreased confidence from the company that it has the ability to influence the pulp mill project proceeding".

In the report Gunns also said that it was talking to its lenders (an ANZ-led consortium) regarding a potential capital raising, restructuring or alternative transaction.

"The outcome of these discussions remains uncertain and as such there exists material uncertainties that cast significant doubt over the ability of the consolidatd group to continue as a going concern," the report said.

Gunns has also sought approval from its lenders to use the proceeds of asset sales to pay the wages of about 600 staff.

In its preliminary final report Gunns owed creditors $203 million.

Industry sources said that on Friday last week buyers inspected the Bell Bay softwood sawmill bought by Gunns from Forest Enterprises Australia for $47 million in December 2010.

It is understood the Tarpeena mill north east of Mt Gambier is also on the market.

In its preliminary final report Gunns valued the "timber operating sites" at $43.7 million.

Last week Gunns agreed to sell a mill at Kalangadoo which employed 18 people