GUNNS LTD last night rejected a payout offer from the state government, fuelling uncertainty in Tasmania's forestry industry.
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Neither party would comment on the amount offered in return for residual rights of the company's logging contracts, or the reasons it was rejected.
The offer was made a week ago under a clause in the $276-million forestry intergovernmental agreement.
A spokesman for Premier Lara Giddings said the state and federal governments remained committed to that agreement.
"We are now working together to find an alternative pathway to resolve outstanding issues with the company," he said.
"We certainly have not closed the door on a commercial settlement with Gunns, but have to talk to the Commonwealth about what that means."
Gunns spokesman Matt Horan said the company would not comment until the process was complete.
Forestry Tasmania was last night seeking information.
"It's obviously a disappointing outcome, but we guess that there would be reasons an agreement couldn't be reached and are keen to understand those reasons," Forestry Tasmania's Ken Jeffreys said.
Greens forestry spokesman Kim Booth urged both governments to let Forestry Tasmania and Gunns fight out a commercial settlement and get on with the wider aims of the agreement.
"Don't let the contractors or environment groups be held to ransom by the recalcitrance of a company like Gunns," he said.
He said not a cent above the commercial value of residual rights, as determined by an independent probity auditor, should be paid.
Opposition forestry spokesman Peter Gutwein described the news as a "body blow" to the forestry agreement.
It has been a month since Gunns cited uncertainty about the payout when it suspended trading.
Australian Securities Exchange's Leeanne Bland said there was no deadline attached to suspension of trading, but companies were obligated to update the market and keep in close contact with ASX.
READ MORE LOG EXPORT MOVE: Page 6