While taxpayer backing has been offered to help a potential Tarpeena sawmill buyer expand to safeguard 200 jobs thrown into doubt by the collapse of Gunns shareholders are unlikely to see any money returned. Source: Herald Sun, The Advertiser, The Australian, The Mercury
Gunns employed 645 workers nationwide and went into administration last week closing its Kalangadoo and Tarpeena mills in the South Australia’s south-east.
The Kalangadoo mill was sold in August and settled yesterday. However, doubts hang over 200 jobs at the larger Tarpeena site.
Treasurer Jack Snelling told The Advertiser yesterday he’d met representatives of a company interested in buying the mill and offered it assistance to deliver long-term job security.
Mr Snelling said the Tarpeena sawmill created many indirect jobs on top of its large on-site workforce.
“I had a meeting with these prospective buyers and was pretty encouraged,” he said yesterday.
“I’ve indicated if they were to put a proposal to us for some sort of assistance … particularly if it were geared towards an expansion of the mill and employment, we’d consider it.”
One of the most likely ways Gunns will retrieve some cash, and the priority of administrators, is the sale of its sawmills in Bell Bay, Tasmania, and Tarpeena, South Australia.
Kingsland Timber, which was set up in March by two Chinese-born businessmen, had submitted a $90m unconditional offer for the mills. China’s Shandong Bohui Paper had also conducted due diligence on the mills.
Yesterday, a spokesman for the administrators said there had been no developments on the sale of the sawmills.
Meanwhile shareholders stand little chance of getting any of their investment back once administrators, employees and secured creditors have been paid, KordaMentha senior partner Mark Korda has confirmed.
When asked whether shareholders had lost all of their money, Mr Korda said: “My prognosis is yes.”
Investors with more than 5% stakes in the company include Perpetual, Bank of America Merrill Lynch, Schroders Investment Management and hedge fund Matthews Capital.
“The prognosis (of whether the mill is economically viable) is very difficult at the moment,” Mr Korda said.
“If it was going to be built, maybe it should have been built by now, but let’s have a look over the next month and see how we go.”
If the project could be made to stack up, an auction would be conducted.
Mr Korda said investors in Gunns managed investment schemes, which own trees in Gunns’ forestry estate, would also lose money.
“They will lose a substantial amount,” he said.
“The payments were made from 1997 onwards: if the trees are older, they’ll get a lot of their money back; if the trees are young, they’ve probably lost most of their money.”
