24/12/2009 - 06:45

Gunns sidesteps Gt Southern question

24/12/2009 - 06:45

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Tasmanian forestry company Gunns declined to comment on projected investor returns for the defunct Great Southern timber schemes, moments before asking investors to support its proposal to take over the projects.

Gunns sidesteps Gt Southern question

Tasmanian forestry company Gunns declined to comment on projected investor returns for the defunct Great Southern timber schemes, moments before asking investors to support its proposal to take over the projects.

The Tasmanian forestry company yesterday received the necessary investor support to take control of eight out of nine timber schemes, and is almost certain to secure the ninth that had its vote deferred until early January.

The vote on the 2006 scheme was deferred until early January, although a last minute proxy lodged in favour of Gunns is expected to give the Tasmanian company control over that scheme, assuming the late proxy is deemed legally valid.

Gunns chief executive Greg L'Estrange sidestepped several questions from concerned investors at the meeting, before promising to provide clarity on the expected returns in the first half of 2010.

Mr L'Estrange said it would take three to four months to come up with a clear estimate, but noted the projections would be less than those contained in the original Great Southern prospectus.

"If you don't get a return, we don't get a return," Mr L'Estrange said, referring to the proposal's structure of sharing net proceeds with investors.

Gunns has had access to the Great Southern "data room" for several months and it is common practice to release projections for forestry managed investment schemes.

Investors speculated at the meeting that a wind-up of the scheme could yield a return of 10 cents in the dollar, according to the experience of those invested in the failed Timbercorp, meaning almost any alternative was worth pursuing.

Great Southern investors who were unfortunate enough to have been allocated allotments on third-party property where landowners have terminated the breached leases - the result of a random process - will not benefit from the appointment of Gunns, and face substantial losses.

Gunns has indicated it would consider making a proposal for the 2007 scheme. It has not indicated any intention for the 2008 scheme which faces numerous challenges.


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