Gunns shareholders likely to lose all their money, receiver warns, says falling woodchip prices, development costs of proposed AU$2.3B pulp mill in Bell Bay, Tasmania, have left company running low on cash
October 2, 2012
(Industry Intelligence Inc.)
– Shareholders who invested in Tasmanian woodchipper Gunns Ltd. are likely to lose all of their money, receiver Mark Korda of KordaMentha told ABC's Inside Business program, the Australian Associated Press reported Sept. 30.
The order for the distribution of funds is as follows: administration costs, employees' entitlements, secured creditors and unsecured creditors, Korda added.
The Australian Securities Exchange suspended trading in Gunns' shares in March. The company, which made a AU$904 million net loss in the financial year 2011-12, entered administration and receivership on Sept. 25.
Korda said the big issue for Gunns is that it is running low on cash, according to the AAP's report which was carried in The Sydney Morning Herald. He noted that a number of factors had contributed to the collapse of the company, including the high value of the Australian dollar, falling woodchip prices due to oversupply, and the costs of research and development for the company's proposed AU$2.3 billion pulp mill at Bell Bay in Tasmania.
Korda said Gunns’ license to build the pulp mill could be an attractive asset to prospective buyers, but the mill must first be evaluated to determine if it would be economically viable.
The primary source of this article is the Australian Associated Press via The Sydney Morning Herald, Rhodes, Australia, on Sept. 30, 2012.