Struggling Tasmanian forestry products company Gunns is continuing to try and raise fresh capital after the earlier plans were wrecked by the withdrawal of a cornerstone investor.
In fact the company seems to be looking for sufficient money to repair the balance sheet, get rid of debt and allow it to chase its cherished pulp plant project.
Gunns said yesterday it now intended raising around $400 million in a proposal that may involve placement of shares to new investors.
"It is the Company’s intention to undertake an equity raising of sufficient size to significantly reduce its debt facilities and thereby strengthen its balance sheet.
"The proposed capital raising by the Company is not yet finalised in a number of key respects, although it is expected that the raising will be approximately $400 million and may involve the placement of shares to new investor," the company said in yesterday’s statement.
On March 9, the Singapore-based Richard Chandler Corporation pulled out of a $150 million plan to become Gunns’s cornerstone investor as part of a $280 million re-capitalisation.
A further update a week ago was inconclusive as to the company’s plans, but in the announcement yesterday the refinancing objectives seem to be taking shape.
As its suspension from trade stretches into a third week, Gunns said in an update it was undergoing a wide-ranging internal financial review with investment bank Moelis & Company in preparation for the equity raising.
"This review includes the ongoing non-core asset sale process, bank facilities and the financial metrics relating to the Bell Bay Pulp Mill," Gunns said.
"Investors have encouraged the company to raise sufficient equity capital to provide it with the desired flexibility in its approach to financing the … pulp mill.
"In addition, the company believes that its ongoing non-core asset sale program will be enhanced by a material strengthening of its balance sheet."
Gunns is still working towards a shareholder meeting to approve re-capitalisation, and plans a further market update on next Monday, April 2.
The shares last traded at 16c.
