The situation is not an easy one and there are several aspects. The bottom line attack is not the only approach and your own efforts via your published adverts show that you recognise this.
When thinking about the roll-over that Gunns require to continue operating, you may find that the ANZ agrees with them – not because they want to benefit Gunns, but because they see this as the best method of regaining some of their previously invested money. However, that is a different thing from giving Gunns MORE money to finance their operations. They may believe that Gunns is on a downward path and that insolvency is inevitable and it may be more beneficial for them to allow Gunns to continue along this path of selling assets to pay down debt, as this money has to come through them, being their bankers. This obviates the necessity of foreclosing on them as they are doing the receiver’s job at no cost to the bank. The receiver will look at all claims, not just those of the bank.
Further to this, Gunns is claiming to still be profitable in their financial statement to shareholders on the ASX, and if this is so, then the ANZ cannot find good reason to lend them more money, which is a very important point, as any extra money given to Gunns can only be seen as a violation of the Equator Principles which they profess to uphold. You do not lend money to ‘profitable’ companies unless it is to further a particular project for which they are seeking finance. The Pulp Mill project breaks ALL the conservation, environmental and social acceptable rules!
However, this will be only a short-term affair, as Gunns outgoings via their MIS involvement alone are enough to sink the company. They are obliged to pay rents and do ‘management’ and maintenance work on these before they mature, and they also have an obligation to replant after harvesting. As many of these plantations are uncertified, it will be almost impossible to sell the results, and there are many reports of serious neglect, which downgrades the sales price.
Their only hope of survival is to find a JVP, but in this economic climate, that may be harder than finding chickens teeth. Apart from that, at their current share price, any potential investor could buy the entire company very cheaply without having Gunns to share the profits of a pulp mill.
Here are a few points that should be made to the ANZ.
1. The former CEO of Gunns is being sued for insider trading by ASIC. This hearing was deferred by his lawyers for two months – a very unusual procedure, but takes it past the known date of the meeting with Gunns Bankers. In my view this deferment this was because:-
3. There is also a class action by Gunns shareholders against the company itself for non-disclosure of losses, which John Gay used to his own advantage in selling his own shares, and they are waiting on the result of the action against the CEO to use as evidence in their class action. This action, if successful, could cost the company anything up to $200 Million, being what the shareholders will claim is the difference that this information would have made to their profits if it had been released on a timely basis. The ANZ should be aware of this.
3. If the actions in the Supreme Court are successful and the planning permits are revoked, Gunns immediately becomes insolvent. The costs of $240 million which they are claiming as an asset for their so-called ‘Substantial Commencement’ will have to be transferred to the cost side of their balance sheet. This effectively doubles as the difference between profit and loss, and with a further $480 million of debt, Gunns cannot legally continue trading as their debts exceed their assets and income. Again, this point should be made to the ANZ. Further to this, the cost of the earthworks will also have to be transferred as well – a further $48 million after doubling.
4. There is no plan B, as they told their shareholders at their AGM.
5. Despite what Gunns might say and no matter how much spin they put on their operations, they have previously announced 25 potential JVPs, none of which have materialised. Any more money invested in Gunns carries an extremely high risk of being lost. From the ANZ shareholders point of view this must be one of the worst possible investment risks imaginable and to throw more investors’ money after bad could see an exit of many investors with a commensurate drop in share price and goodwill. All this in favour of backing a company that is valued at less than $90 million by the market, with current debts of $816 Million and climbing and with the potential of adding another $528 Million to this sum if the mill falls over. This will create a current debt of $1.344 Billion with zero chance of ever paying this back. Also a point that should be made strongly to the directors of the ANZ.
6. The rising Australian Dollar does Gunns sales prospects for pulp no favours.
Gunns in their entire history has never had a Social License. The have actively acted against the interests of the public at every turn, including withdrawing from the RPDC, pushing through the PMAA with the totally anti-social clause Section 11 which cancels all civil rights and the ability to object, the engineering of the PAL Act for their own benefit, and the notorious SLAPP actions that were designed to suppress public opinion. Add to this the damage they have caused to the Tamar Valley residents, the gratis infrastructure they have had built for them, the cost of all subsidies and the lowering of property values in the north of Tasmania, the pipeline gift over private property etc. There is an endless list of this antisocial behaviour, which they are now trying to play down by engaging with a self-chosen group of people they claim to be representative of the local residents and through which they try to falsely claim social acceptance. This goes totally against the Equator Principles that the ANZ state they follow.
The Ideal (Extract)
What the Equator Principles require
Managers of projects with a high social or environmental impact must consult with local communities about concerns those communities may have. Following consultation they must then prepare a management and monitoring plan describing the actions needed to adequately mitigate the social and environmental risks of the project.
The principles do not prescribe for a bank what projects it should be involved in and those it should avoid, but rather ensure the bank makes an informed decision, by requiring a thorough analysis of potential social and environmental impacts. ….. ANZ Bank
The Reality
Leaked emails from Les Baker (TT HERE and HERE).
“table 9.2 has dioxin concentrations for various areas around Georgetown. For God’s sake what are (blanked out) trying to do, bring down two governments plus our company. This is no different to the contour maps, they have totally missed my point. Pls. give them some background on Wesley Vale and then redo this report“
To amplify his position he writes, on 06/04/2006 at 12:18pm
“3. I have not looked, but if the Dioxin concentration chart is there it will need to go.” …
At the time Les Barker wrote to them he was signing under the position of General Manager, Bell Bay Pulp Mill Project, Executive Director- Gunns Plantations.
The above is just one example of how far this company is prepared to go in order to pursue its own ends. They will probably now try to explain this away by stating that they have changed their processing to ‘Lite Bleach’, but that does not change their willingness to try to distort information or quell public opinion. Even to date, their press releases and statements to the ASX STILL distort the real picture, in my view. The leopard has not changed its spots, despite the sugar coating! Barnaby Drake
ANZ Directors
Mr John Morschel (Chairman, Director) Mr Michael Smith (CEO, Director) Mr Graham Hodges (Deputy CEO) Dr Greg Clark (Director) Mr Peter Hay (Director) Mr Lee Hsien Yang (Director) Mr Ian Macfarlane (Director) Mr David Meiklejohn (Director) Ms Alison Watkins (Director) Mr Peter Marriott (CFO) Mr Bob Santamaria (General Counsel)
Company secretary
Mr Peter Marriott Mr Bob Santamaria Mr John Priestley
• Barnaby Drake wrote this as a letter to Lucy Landon-Lane of anti-mill group Pulp The Mill.
GTP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
