Some other interesting points from recent GNS HY brief:- Bell...

Some other interesting points from recent GNS HY brief:

- Bell Bay pulp mill JV quoted as being 50% equity and gets Tasmanian land and trees; Tamar woodchip plant; Hampshire woodchip plant; nursery; and mill work in progress.

Subtle shift from previous 51% equity (control)to 50%.
Hampshire was closed at the end of 2010, at the time allegedly never to be opened again.

- RCC holding up to 39% of equity after issue assuming all rights taken up.

If you do the sums this can only happen if 'the bond worth up to A$75 million (“Bond”) with attaching convertible warrants' converts at the same 12 cents per share the rights issue is at(including the first $75m of RCC's $150m investment. That could be money for jam for RCC if the bond converts when the share price is much higher (e.g. pulp mill up and running).

- Maximum value from Tasmanian forest estate will be achieved through supply to the pulp mill operation. Minimal exports from the Tasmanian estate planned–resource to be grown on for mill input.

GNS is now clearly 'sitting' on its Tasmanian estate and focusing current exports from Albany and Portland. This is MIS ex Great Southern plantation. Benefit: it gets rid of the monkey on their back of high-rent leased land while preserving the Tasmanian estate, which sits mainly on freehold land, until the pulp mill requires wood. Cutting below the sustainable yield now makes wood flow planning for the first three or so years of mill operation very easy as it provides initial independence from Tasmanian 3rd parties - Forestry Tas and FEA - see graph P22 of presentation). Downside: because GNS is only entitled to a small proportion of the revenue from mainland wood sales (woodlot owners get their share), woodchips revenue dropped from $166m in the 1st HY 2011 to $44m (73% drop). Its a pity they only report $ and not volume.

Conclusion of sale of Green Triangle assets should see a positive re-rating of GNS. MIS loan book sale is rumoured to be happening soon too.