In a statement to the Australian Securities Exchange this morning, company secretary Wayne Chapman announced the retirement, which had been flagged late last month when Gunns announced a restructure of its business.

Mr Gray leaves the board with almost 102,000 ordinary shares in his own name, with a total of 488,901 in total.

He will remain as a director of Gunns Plantations and it is understood he will play a role in a new entity called Southern Star Corporation, a joint venture to run the $2.5 billion Bell Bay pulp mill.

Gunns is attempting to sell its non-forestry assets, including the Mitre 10 hardware chain and Tamar Ridge wineries, to fund its share of the pulp mill project.

Gunns shares have fallen drastically in afternoon trade to a new low, down almost 6 per cent to 47.5 cents.