Done deals to allow Gunns to plan its future

Timber company Gunns will today outline what a government payout agreement announced yesterday means for the company.

Compensation and business deals - including the sale of the Triabunna woodchip mill - flowing from Tasmania's forest reform agreement had hinged on Gunns agreeing to the government payout for the company's exit from native forest harvesting.

Forest contractors and timber workers payouts were also waiting on the agreement.

But Gunns would only confirm yesterday that it had accepted the state government's final offer.

Gunns delivered a two- sentence update to the Australian Securities Exchange shortly after Ms Giddings announced that the offer had been accepted, saying that it would provide details of the agreement and its implications for the company today.

Managing director Greg L'Estrange was unavailable for comment but a company spokesman confirmed that it had agreed to a $23 million offer. It had previously rejected an $11.5 million offer.

It is understood that Gunns was angry that the first offer tied the payout to a disputed debt to Forestry Tasmania.

Gunns shares have been in a trading halt since early last month pending the outcome of the payout negotiations.

The $23 million will be used to further pay down debt as it prepares its proposed Bell Bay pulp mill site for construction of the $2.3 billion mill.

Mr L'Estrange had previously indicated Gunns expected between $200 million and $250 million for exiting native forest harvesting, but this dropped to $106 million before the intergovernmental agreement was signed.

Launceston financial analyst Tony Gray said Gunns' lack of a detailed response to the settlement was not surprising.

"Hopefully there will be more detail after the market opens (today)," he said.

"I would have thought that it would start to get difficult to maintain its argument for staying out of the market now."

Mr Gray said that the $23 million would not change things a lot for the company.

It would see the company's position improved but its broader market value weakened.