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Gunns in voluntary administration

Gunns Ltd has entered voluntary administration after failing to secure funds to keep the company running. The company had been in talks with lenders seeking support for its plans for a capital raising or restructure, but those lenders have now told the company they will not provide further funds. Source: Timberbiz

The company last month announced a $904 million loss for the 2011-2012 financial year, and shares in the company have been in a trading halt for more than six months.

In an official statement to the Australian Securities Exchange, Gunns said the company was unable to continue trading and that the directors were in the process of appointing an administrator. That appointment is expected to be made shortly.

In a statement Gunns said: “The company is disappointed that it will not be able to pursue the restructuring transaction, which it considers would have delivered a better outcome for the people who have a stake in the company’s past and future.

The company is very grateful to all those people, especially employees, past and present, who worked hard to support the company’s strategy.

This is a disappointment for them and those associated with the restructure of Gunns’ business to a plantation-based manufacturing industry in Tasmania.”

Financial analyst Matthew Torenius said that it could be the end of the company “as we know it”.

He said it still has several existing assets such as softwood sawmills, plantation operations and the pulp mill project in Tasmania’s Tamar Valley where site works have been continuing.

“That will be looked at by the administrators now. I’d imagine they would either look at a program of refinancing the company, if that’s possible, or selling off what remaining assets the company has,” he said.

Tasmanian Premier Lara Giddings said Gunns’ demise does not spell the end of the company’s controversial pulp mill.

“I would say to people be very careful about dancing on the grave because the fact is the resource still exists, the proposal still exists,” she said.

“This demise of this company, the unfortunate demise of this company, may in fact mean that other proponents come forward.”

However, Tasmanian Greens MP Kim Booth says Gunns going into administration is the final “nail in the coffin” for the company’s pulp mill project in the Tamar Valley.