Where to tasmania?

Two months ago the problems facing the State Government were outlined with a detailed examination of cash inflows and outflows in the General Government Sector over a 9 year period including the then Forward Estimates: State of the State: What your mother didn’t tell you, graph by graph.

This note proposes to update the information as a result of last week’s Budget, to see what effects if any may ensue.

Wilful blindness and the new forest industry

Just what is happening with Gunns?

On 15^th May 2012 it requested ASX extend its listing suspension pending recapitalisation which it anticipated might take an indefinite period.

Gunns advised that

·        The Victorian Heyfield timber mill sale agreement was finally executed. The enterprise value was reported at $28 million.

·        The sale will end native forest operations for Gunns in Victoria following similar moves in WA and announced intentions in Tasmania.

·        The sale of Green Triangle assets was proceeding (as it has for the last 12 months)

·        Indicative offers had been received for the mainland plantation assets (in other words the Great Southern MIS management rights) and the Portland woodchip facility and a structured sale process had commenced.

·        Mr L’Estrange had his term extended until 31^st December 2012.

Feathering nests or furthering tassie....?

Not everyone it seems is fully aware of the scale of funds flowing into Federal Hotel’s coffers each year from gambling. It’s all publicly available information, from the Tasmanian Gaming Commission Reports and ASIC returns lodged by Federal Hotels’ parent company Mulawa Holdings Pty Limited.

For the year 2010/11, player losses for table gambling, keno and poker machines (EGMs), the 3 leisure pursuits covered by FH’s monopoly license started to flatten out a wee bit, $256.9 million compared with $253.2 million in the previous year. Pubs and clubs (excluding those owned by FH) ended up with $16.3 million (6%) from commissions net of EGM machine hire and promotion fees, the Government $59.5 million (23%) in taxes and license fees whilst the balance of $181.1 million (70%) landed in FH’s lap.

Forestry Tasmania's shrinking estate

Forestry Tasmania is not as bad as Geoff Law suggests in a recent posting Forestry Tasmania: A compelling case for reform: HERE.

It’s far worse.

The sale of Taswood Growers’ 46,000 hectare softwood plantation estate of which FT was a 50% joint venture (JV) partner was just another indecent hasty grab for cash, much like the TOTE sale.

Whilst we still own the land we will get no rental return for the next 57 years.

Dream on...

Just when you thought the croupier had gone home, Morningstar analyst Peter Warnes was reported in yesterday’s press as saying ... “This is the last throw of the dice.”

He was referring to Gunns’ plan to raise another $400 million from shareholders. Business Spectator said “the funds would be used to help the company cope with the planned sale of non-core assets”. What does that mean? Are the non-core assets being sold? Or will Gunns be required to pay ‘purchasers’ to take the assets off its hands?

The sale of assets has proved to be tortuously difficult for Gunns.

The sale of Green Triangle land has been awaiting settlement for ages. The latest announcement re the Green Triangle land was only about shuffling the asset into another entity, not reaping any cash from a third party.

State of the state

 

Tasmania — A Cash Flow Analysis Based on a Working Paper commissioned by Ruth Forrest MLC and a presentation to the Economics Society, Hobart, 22nd March 2012.

The aim of this paper is an assessment of Tasmania’s past, current and forecast financial position, over a 9 year period, from 2006/07 to 2014/15. In particular this will include a close look at the General Government Sector’s (GGS) Cash Flow Statements to

• Reclassify inflows and outflows into more appropriate categories of ‘operating’, ‘investing’ and ‘financing’ as will allow an easier interpretation of Government financial statements.

• Examine the components of each category of inflow and outflow.

• Examine the source of inflows as Federal vs State sourced revenue.

• Provide a basis for understanding and measuring sustainability.

Nobody's buying

Nobody’s buying.

At least not Gunns’ assets.

A few are still buying CEO Greg L’Estrange’s story as described in the latest half yearly report and presentation of possibly the worst garage sale ever.

A year ago Gunns owed secured creditors $631 million. Now it’s $587 million.