pulp mill's check list

Pulp mill's check list






NICK CLARK | February 23, 2012 12.01am
RICHARD Chandler Corporation wants to find out if Gunns has a social licence and broad community support for its pulp mill before it invests $150 million in the timber firm.

In its first comment since a Gunns' statement to the Australian Securities Exchange on February 8, the corporation, heralded as a white knight for the pulp mill project, confirmed it was considering injecting money.

The statement did not specifically mention the $2.3 billion Bell Bay mill but said its "investment framework" would look closely at the degree of community support.

"The Richard Chandler Corporation is contemplating an investment in Gunns Ltd," the statement said.

"It is undertaking its due diligence process which is scheduled to conclude in March."

Gunns shares, which have risen from 12.5c since the Chandler announcement, finished at 18.5c yesterday.

A social licence, broadly interpreted as community support, was first sought by Gunns in 2010 when it approached the Forest Stewardship Council for certification of its plantations and later sold 28,000ha of native forest.

The Chandler statement came after Deputy Premier Bryan Green and Opposition Leader Will Hodgman met for an hour on Tuesday with a corporate adviser to Chandler.

Mr Green told ABC radio yesterday he could not comment on the private meeting.

Mr Hodgman said he was pleased to be able to meet and demonstrate the strong bipartisan support for the pulp mill.

Early this month a Gunns media release quoted Alan Kelly, a senior Chandler adviser, saying that it "proposes to work with Gunns management to 'catalyse' the Bell Bay pulp mill".

Chandler said it had noted the high degree of public interest in the topic and discussion in the media.

If it agreed to go ahead, Chandler would take a 39 per cent share of Gunns and sign a "definitive and binding securities subscription agreement" for a $150 million placement.

Approvals would also be sought from the Foreign Investment Review Board, ASX, company shareholders and lenders.

Some of the factors to be examined were:

• Social value creation, including employment and environmental sustainability.

• Ascertaining the degree of social licence and broad community support.

• Strong corporate governance plan which establishes the company as an ethical and respected contributor to the economy of Tasmania.

• Alignment with national and state policies.

• Financial returns that reflect industry and project risks.

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