Just back from a long trip and feel again the heat of the debate.
One problem of voting for Gunns is that it may NOT survive long if its pulp mill project goes under.
1. GNS is a quasi MIS company with ~50% of PBIT from MIS just a couple years ago. Although the new MIS projects diminishes in recent years, it is still bearing a large burden of the old MIS (Ponzi!) projects in terms of maintenance, managing, paying rents, prying interests on mortgages of the project lands, etc... causing its profit to slump.
2. By 30/6/2009, GNS had capitalised $149.7m "Bell Bay" pulp mill costs in its balance sheet (see page 102, GNS 2009 report). This amount is nearly 3 times of its 2009 profit, and it will go if the mill fails.
3. Last week the CEO John Gay sold ~45% of his direct share holdings on market for $3.1m.
So what would happen next?
GTP Price at posting:
12.0¢ Sentiment: None Disclosure: Not Held
