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Future unclear for Gunns contractors

Forestry industry turmoil in Tasmania has finally sent timber giant Gunns into voluntary administration and left its transport contractors with an uncertain future, transport experts say.

Gunns told the Australian Securities Exchange this morning that its lenders – reportedly local and northern hemisphere banks − had put a halt to restructuring plans, which had forced the company to stop trading and seek and administrator.

By Rob McKay | September 25, 2012

Forestry industry turmoil in Tasmania has finally sent timber giant Gunns into voluntary administration and left its
transport contractors with an uncertain future, freight experts say.

Gunns told the Australian Securities Exchange this morning that its lenders – reportedly local and northern hemisphere banks – had put a halt to restructuring plans, which had forced the company to stop trading and seek and administrator.

“Ongoing lender group support has been required in order to stabilise the company’s operations whilst discussions in relation to a potential capital raising, restructuring or alternative transaction proceed, and to retain proceeds from planned asset sales to meet the operational and working capital requirements of the business,” the firm says.

Ed Vincent, CEO of the Tasmanian Forest Contractors Association, whose members include logging truck operators, described it “a bad day for the forestry industry in Tasmania” that a company of the stature that Gunns could boast just two years ago could go to the wall so quickly.

The options for transport operators doing a lot of business with Gunns were unclear as the administrator had not been named, Vincent adds.

He hopes the Forest Products division, which looks after road construction and maintenance, timber harvesting and haulage, will continue operating as before but foresees cash-flow being crimped.

Though not surprised by the announcement, other transport industry experts believe it is a negative outcome for the state.

Tasmanian Transport Association Executive Director Robin Phillips believes that while logging contractors would bear the brunt, with many family enterprises exposed, there was likely the impact on the state transport sector broadly.

Tasmanian Freight Logistics Council CEO Rob McGuire concurs.

“It’s not good for Tasmania – they’ve been in business here for a long time,” McGuire says.

The Gunns news comes less than a month after the firm recorded a $903.9 million net loss for the last financial year and may signal the end of plans to spend $2 billion building a pulp mill at Bell Bay in Tasmania’s north.

Early estimates of the likely growth in log truck traffic the mill would have attracted were put at from 260 movements a day presently to as much as 469 as it got underway and 606 once up and running.

The fallout will not be confined to Tasmania, with the company doing business in Victoria, Tasmania and Western Australia.

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