Tasmanian timber company Gunns is a step closer to driving down debt after finding a buyer for its softwood plantation estate in south-east Australia.
The company has locked in an American buyer for its softwood plantation on the South Australian-Victorian border.
The timber giant owns almost 50,000 hectares in the Green Triangle region.
While Gunns has valued the asset at about $250 million, it has told the stock exchange it expects a return of $107 million from the sale.
Financial analyst Tony Gray says every dollar counts as the company endeavours to pay off debt.
"They have to pay $10 million a quarter capital repayment of their loan; so that'll be $10 million dollars this month, $10 million September, $10 million December," he said.
"They also have a short term finance facility that they need to repay by Thursday next week, so that's $55 million this month.
"Their main refinancing facility is January 2012, that's about $360 million."
The deal is subject to finance and conditions and is expected to be completed by the end of October.
The market reacted positively to the announcement.
Earlier this month, the company announced a sale of its assets in case it cannot find a joint venture partner to help finance the $2 billion Tamar Valley pulp mill.
GNS Price at posting:
27.0¢ Sentiment: None Disclosure: Not Held
