Investor withdraws support for GunnsFriday 16 Mar 2012 Gunns shares were placed in a two-day trading halt on Friday last week at the request of the company, after it announced that the Singapore-based Richard Chandler Corporation (RCC) had decided against investing in Gunns.RCC had been undertaking a process of due diligence to assess the possibility of investing AU$150 million and taking a 39% stake in Gunns. The investment was to have been part of a proposed AU$280 million capital raising for Gunns that would have given the RCC a cornerstone stake in the company. Gunns had announced the AU$150 million placement of securities to RCC and the AU$130 million rights issue on 8 February. At that stage, the commercial terms of the placement and the rights issue were non-binding, and RCC's subscription was subject to completion of due diligence. Opponents of Gunns' AU$2.3 billion Tasmanian pulp mill on the back of the withdrawal of a cornerstone have declared the project dead. Analysts also said the future of the mill and Gunns itself was now in question, with the company's bankers potentially revisiting a deadline for repayment of its main AU$360m debt facility. Later in the week Gunns extended its trading halt pending an announcement on a new capital raising strategy. In a statement to the stock exchange, Gunns said it will offer new shares to shareholders and is in negotiations with a new institutional investor. Gunns expected the suspension to last four trading days, with quotation of its securities to restart next Monday. |
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