Vale Auspine

A history of Gunns undoubtedly will contain a chapter on the Auspine debacle, now edging closer to finality.

Tuck shop accounting

The Treasurer has cobbled together a survival plan for the next few years.

Short on vision but at least an attempt to confront our problems, however ill defined.

Why Gunns is teetering

What company has received $500 million in cash from the issue of new shares over the past three years but only has a market value of $300 million?

Why Gunns, of course.

What company, when faced with the daunting prospect of repaying or renegotiating almost all its borrowings of $600 million within 12 months, pretends that the announced sale of all assets is to finance a new pulp mill rather than to enable the solvency declaration to be signed?

What company, having announced the sale of all assets, will be forced to publicly reveal in its annual accounts the write down of the values to reflect current market offers rather than pie-in-the sky expectations?

What unprofitable company, whose operations have been sold, about to be sold or closed down, can still claim “underlying profit” of $40 to $50 million?

What company, operating in the native forest sector with decrepit assets and diminishing markets, is demanding compensation for a cessation of its loss-making activities?

What company failed to foresee the decline in global demand for native forest woodchips, yet nevertheless books income from plantations not due for six years as current year income?

What company brazenly tells the market that it is confident of gaining finance of $2.5 billion without a joint venture partner —  but is yet to reveal the new business case despite adverse exchange rate movements, the proposed sale of all forestry assets and the plummeting market assessment of its assets?

What company has not bothered to explain a material matter as to how second and third rotation tree crops needed as feedstock for a pulp mill, will be arranged and financed now that MIS schemes are defunct and plantation land about to be sold?

That’s right, Gunns, in every case.

Death throes?

There is nothing particularly new in the latest statement by Gunns to the ASX.

Except maybe that “that reported statutory earnings for the period may vary materially from prior comparative periods, due to the effects of asset valuation adjustments arising from asset sale processes”.

This means that the bottom line will cop an absolute shellacking from all the asset write downs. It is likely to be a large red number. Gunns are forewarning the market.