Richard Chandler backs ASX-listed Gunns

Wednesday 8th February 2012

New Zealand-born billionaire Richard Chandler’s investment vehicle will take a cornerstone stake in Gunns as part of the ASX-listed forest plantation owner’s capital raising.

The Tasmanian-based company wants to raise as much as A$280 million, including a A$130 million pro-rata renounceable rights issue offering of 1.3 new shares at 12 Australian cents apiece for every existing share owned.

The balance will be made up by a A$150 million placement to Richard Chandler Capital Corp (RCC) comprising a A$75 million bond with attaching convertible warrants and the rest in shares at the same price as the rights issue. Funds raised from the capital injection and Gunns’ asset sale programme will be used to repay debt.

The shares soared 60 percent to 20 Australian cents today, a premium of 67 percent over the rights issue price.

Gunns expected to cut net debt to A$360 million by the end of last month, and extended its bank facility until the end of the year. As part of a new strategy, it has been selling non-core assets and consolidating timber processing units, as well as working towards completing its stalled pulp mill project.

“We see its future as building a foundation for sustainable development and economic growth which will provide a future for the Tasmanian forestry industry,” RCC senior adviser Alan Kelly said in a statement. “The Richard Chandler Corporation proposes to work with Gunns management to catalyse the Bell Bay Pulp Mill.”

The deal is subject to the parties entering a binding agreement and securing approvals from the ASX, shareholders and lenders within a 90-day exclusivity period, and RCC’s investment relies on the completion of due diligence and approval from Australia’s Foreign Investment Review Board.

(BusinessDesk)

BusinessDesk.co.nz

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