Gunns comes under fire from shareholders"Gunns' two biggest shareholders have criticised a management shake-up at the forestry group, saying it was unacceptable for founder and chairman John Gay to assume control of a newly created subsidiary.
The Australian Financial Review reports that under mounting pressure from investors to sack Mr Gay, Gunns last week said he would step down as chairman and take on a the position of chairman of a newly created subsidiary, Southern Star.
Southern Star will own Gunns' $2.2 billion pulp mill project and Tasmanian timber plantations. Gunns will retain at least 51 per cent of Southern Star. It plans to sell the bulk of its native forest plantations and "non-forestry assets", which include a network of Mitre 10 hardware stores, a construction division and the Tamar Ridge Estates winery.
But Charlie Lanchester, a portfolio manager at Gunns' single-biggest shareholder Perpetual, said it wasn't acceptable for Mr Gay and another director, former Tasmanian premier Robin Gray, to retain close links to Gunns.
"They [Gunns] have intended for them to retire, however, their continued involvement in important subsidiaries is unacceptable," Mr Lanchester said. "The company and its shareholders will be better served by fresh leadership at the board level."
Deutsche Bank cuts FY10 earnings forecasts by 63% and says “we remain of the view that the company should not pursue a demerger nor the pulp mill project, as they are not likely to add to value,” retaining Hold rating. GNS last 52.5 cents