Tasmania's Gunns in trading halt after Chandler walks away from deal

Friday 9th March 2012 2 Comments

Gunns, the ASX-listed forest plantation owner, is in a trading halt as it looks for new capital after New Zealand-born billionaire Richard Chandler backed out of a cornerstone role in a A$280 million deal.

The Tasmanian-based company requested a two-day halt after it was “advised that the Richard Chandler Corporation does not intend to proceed with its participation in the proposed capital equity raising” outlined last month, it said in a statement to the ASX.

“The company is in discussions with equity investors in respect of the raising” and it will announce more information about the recapitalisation at the end of the discussions, it said.

Gunns shares last traded at 16 Australian cents apiece, valuing the company at A$140 million.

Chandler’s investment vehicle has been doing due diligence on Gunns for the last month, as it weighed up taking an A$150 million stake in the company as part of a rights issue.

That evaluation included whether social value is created, such as establishing jobs and improving sustainable environmental practices, attracting local support, imposing strong corporate governance, making appropriate financial returns and setting up conservative debt levels, Chandler said last month.

Chandler co-founded Sovereign Global Investment with his brother Christopher in 1986, primarily investing in emerging markets. In 2006, Sovereign demerged, and Richard Chandler established Orient Global, which is now known as RCC, according to the company’s website.

That vehicle is split into two arms, the Creative World Group which is a social investment group focusing on education and healthcare, and the Capital group which invests in a wide range of industries.

BusinessDesk.co.nz

Comments from our readers

On 9 March 2012 at 2:26 pm Richard Bentley said:

With this news, I wonder if Gunn's will be the next Tasmanian company to go into voluntary administration.

On 9 March 2012 at 3:55 pm William Boeder said:

That this blow has been dumped upon Gunns Ltd, they in their past have been an almighty ruthless anti conservation juggernaut and were engaged in turning Tasmania's Old Growth Ancient Forests into mere wood-chips. In their former time this company cost both State and Federal governments dearly by way of their constant lobbying for an inordinate volume of subsidies.