Don't write us off over write-down: Gunns

GUNNS Limited remains solvent and shouldn't be written off yet, the company said yesterday.

Spokeswoman for the company Michelle Hindson said that speculation that Gunns was no longer financially viable and that its Bell Bay pulp mill project was dead was mischievous.

This was despite a market update at the start of the week that indicated for the first time that the Gunns' board no longer regarded the pulp mill as a "probable to proceed'' project.

The company has sold assets during the past 18 months to reduce debt and concentrate efforts on building the pulp mill.

Pulp the Mill spokeswoman Lucy Landon-Lane said yesterday that the company's decision to write-down a major part of its $250 million investment in the pulp mill was not a reason to celebrate an end to the project.

``Until it is announced that the project is dead we have to live under the cloud of uncertainty over its future,'' she said.

Industry analyst Robert Eastment said that it was wrong to describe the Gunns' board as split over whether to push on with the pulp mill project.

He said that the board was assessing its options under financial constraints imposed on the company by the reduced value of its assets.

But industry commentators said that Gunns' report to the Australian Securities Exchange supported speculation that the company could go into receivership or be ripe for a takeover.

Australian Shareholders Association director and Crikey founder Stephen Mayne said that a 100 per cent sale of the pulp mill project was possible.

``If that happens it will go for significantly less than $200 million,'' he said.

Gunns told the ASX this week that development costs for the pulp mill project so far had been about $250 million and that it intended to write-down a significant component of the cost.

Tasmanian Greens forests spokesman Kim Booth said that the company's market update indicated the death of the pulp mill project.

``If you write off the alleged value of an asset then you have to get rid of it,'' Mr Booth said.

``My understanding of the Australian taxation law is that they (Gunns) are now writing the project off - the permit itself may still have a life of its own but without the plantation flows and the systems behind it, it's probably worthless anyway as a document.''

Launceston financial analyst Tony Gray said that permits and approvals would remain in place, making the pulp mill project and its infrastructure viable for purchase.

Ms Hindson said that this week's market update was part of a three-stage accounting process started in July.

The final stage would be the release of the company's full year financial results on August 30.

The construction site of the proposed Gunns pulp mill.

The construction site of the proposed Gunns pulp mill.


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