John Gay once promised Tasmanians that the proposed pulp mill would be 100% owned by Gunns, would deliver umpteen thousand full time jobs to local Tasmanians and umpteen billion dollars into local coffers.
He also said the Mill would be built and running by 2009. Its now half way through 2010 and not only do Gunns not have the money, we now know that the prospects of even a 50% Tasmanian owned mill are remote, just as the likelihood of the project ever getting off the ground. People in and associated with the industry have already admitted that Tasmanians will be lucky to get any of the work associated with construction of the mill.
Gunns financial situation is as dire as I have ever seen it and as market continues to be unimpressed by the so called "company restructure" the share price is in freefall.
One local financial analyst said this week that building the pulp mill was imperative for Gunns as the company couldnt afford to write off the $150 million plus it had thus far capitalised on the project. I'm no economist but I would argue that it is not sound or safe for anyone involved to build a $2.5-3 Billion dollar heavy industrial project for such a reason. And that is before we even begin to talk about the existing problem of the project already being on the nose with everyone except a few politicians and lumberjacks.
and......
http://www.examiner.com.au/news/local/news/economy-business-it-finance/gunns-shares-tumble-again/1836754.aspx
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Good point Rick. Why would anybody spend $2,500 million just to save $150 million? Unless they were Gunns of course.
ReplyDeleteIts only possible in Tasmania Karl.
ReplyDeleteSo Gunns can write off the $150 million now, which means their held assets are $150 million less, so their creditors tighten up on refinancing, and then Gunns goes bankrupt. Probably soon. So then all the shares are worthless, and any shareholder who wasn't already involved in the pending class action suit promptly jumps on the bandwagon, and possibly there would be an attempt to legally attack the directors directly, as the corporation would be in liquidation at that point. That's one possibility.
ReplyDeleteThe other is that Gunns just blunder along for awhile longer, and hope it all goes away by somebody buying them or SSC out - like an Indonesian company with cash to spare that's casting around for a way to get fibre without being seen to kill any more orangutans, which is starting to hurt their business. Now that Gunns is getting all FSC'ed up and some of the NGOs are backing down, such a buyer wouldn't look like the devil incarnate anymore.
So yeah, Gunns is stuck between a rock and a hard place. A stupid rock, and a retard hard place, but there you are. The retard hard place probably makes the most sense for them - especially if there's a perception local opposition is dying down, and that if somebody buys out the SSC and promises to be nice, nobody'll stop them putting the mill up.
Interesting theories La spliffe.
ReplyDeleteWere you on that bong again last night?
It's medicinal, I suffer from a serious case of being professionally obliged to pay attention to Gunns' finances.
ReplyDeleteAnyways, now that Gay's gone altogether to placate the shareholders, we'll see if the people who would actually have to live around the pulp mill keep their opposition strong. I hope turning somebody into a boogeyman isn't going to lead to a loss of focus now that he's been got rid of.
Wise words as always La Spliffe.
ReplyDeleteThat is why you are always welcome at Tascommentary.