Gunns prepares for AU$400M equity raising, says detailed business review in progress with advisors, requests continuation of share trading halt until details are finalized

Wendy Lisney

LAUNCESTON, Tasmania , March 26, 2012 (press release) – Further to Gunns Limited’s (the “Company”) announcement on 19 March 2012, the Company provides the following update.

Equity Raising

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 investors.

Investors have encouraged the Company to raise sufficient equity capital to provide it with the desired flexibility in its approach to financing the Bell Bay Pulp Mill. Additional financial flexibility is likely to result in a superior outcome in the Pulp Mill financing. In addition, the Company believes that its ongoing non-core asset sale program will be enhanced by a material strengthening of its balance sheet.

In preparation for the equity raising, the Company is working with its advisors Moelis & Company in undertaking a detailed review. This review includes the ongoing non-core asset sale process, bank facilities and the financial metrics relating to the Bell Bay Pulp Mill. Concurrently the Company is preparing the necessary documentation relating to the equity raising and likely shareholder meeting to approve aspects of the proposed recapitalisation that is under consideration by the Company.

Suspension from Trading

The Company requests that its suspension from trading continue until the details of the proposed equity raising, and associated preparation of documents have been finalised. The Company expects to be in a position to provide a further update to the ASX and the market regarding the proposed capital raising on 2 April 2012.

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