TIMBER company Gunns is expected to offer more shares in a bid to generate cash, raising speculation that it is close to securing a partner for its $3 billion Bell Bay pulp mill.
Yesterday Gunns went into a trading halt pending an announcement about ``capital raising and equity investment''.
The company has until the start of trade tomorrow to make the announcement.
Shadforth Financial Group's Launceston manager, Chris Elliot, said it was likely to be a precursor to securing a partner for the pulp mill.
``There's nothing really left for Gunns. It's not an asset sale - we know their finances have been sorted out,'' Mr Elliot said.
``It's really a capital raising and equity investment that you would suspect is associated with the final stages of the process to secure a joint venture partner for the pulp mill.''
Last month a syndicate of 10 banks, including the ANZ, granted the company an extension to pay back its $340 million debt.
TG Financial's Tony Gray said the announcement would simply outline more details about the share offer, such as how many it would offer and at what price.
Given the company's low share price at 12.5, its ability to raise money through the share offer was limited.
``If they issued one share for every existing share, they'd only raise $85 million,'' Mr Gray said.
He said the timing of the announcement suggested it was linked to the banks' decision to give Gunns more time, and the extra money would probably be used to pay down the debt.
Time is running out for the company, with work at the Bell Bay site likely to stall without an injection of funds to allow it to start major construction.
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