In an announcement to the Australian Stock Exchange this morning, Gunns said it had signed a term sheet with Mr Chandler's company, Richard Chandler Capital Corporation, containing the key commercial terms for a proposed capital raising involving a rights issue and placement to RCC of securities in Gunns.

CLICK HERE TO READ GUNNS' ANNOUNCEMENT TO THE ASX

Gunns also announced it would offer a rights issue of 1.3 new shares for every one Gunns share at 12 cents a share.

The company said that if the rights issue was wholly subscribed for, it will raise about $130 million.

"Gunns has been restructured over the past few years into a world scale plantation forestry company," Richard Chandler Corporation senior advisor Alan Kelly said in the statement.

"We see its future as building a foundation for sustainable development and economic growth which will provide a future for the Tasmanian forestry industry.

"The Richard Chandler Corporation proposes to work with Gunns management to catalyse the Bell Bay pulp mill.

"The pulp mill project is expected to create over 3000 jobs, significant bio-energy power generation, strong export revenues and approximately $1 billion in federal and state taxes.

"We believe it will make a significant long-term contribution to the Tasmanian and Australian economies."

MORE TO COME