Gunns needs $560m just to pay bills, says analyst

Gunns needs $560m just to pay bills, says analyst

TASMANIAN timber company Gunns needs at least $560 million from its newly announced sale of assets to meet short-term debt, a Northern Tasmanian analyst said yesterday.

And analyst Tony Gray said that figure was before the company starts to find the money to make a substantial start on its proposed $2.3 billion Bell Bay pulp mill.

Gunns managing director Greg L'Estrange came out fighting suggestions yesterday that major assets sales announced on Wednesday were a do-or-die effort to raise cash for the pulp mill.

He refused to put a figure to the amount that the company needed from the expanded sale of assets.

He also confirmed that Gunns still hoped to secure a joint- venture partner to build the mill despite announcing that the company was prepared to go it alone on financing if necessary.

The assets sale did not have to be finalised before the August permits for a start on the pulp mill ran out," Mr L'Estrange said.

But Mr Gray said that Gunns' last half-yearly report showed the company had a large loan payment due in the next six months before it started finding money for the mill.

The report showed that the company faced debt repayments of about $200 million in the 2011 calendar year.

It would also be required to deal with its $360 million refinancing arrangements in January.

Gunns told the Australian Securities Exchange on Wednesday that it needed to pay off a short-term advance of $45 million by the end of this month.

It must also make a $10 million quarterly loan repayment this month as well as another in September and again in December.

The company has struggled to sell assets in the past six months, with a deal on the Triabunna woodchip mill still not signed.

It also has sites like its Somerset mill that has not produced for several months because it can't access the necessary resource.

Mr Gray said that the marketplace was not conducive to asset sales with companies including Elders, Southern Forests and Timber Corp still sitting on property for sale after many months.

"It's a buyer's market," Mr Gray said.