Woodchipper Gunns may seek to raise about A$400 million ($512 million) to cut debt and support the development of its A$2.5 billion pulp mill project, in what one analyst describes as its "last throw of the dice".
The amount of the proposed new capital raising is much larger than the A$280 million capital raising previously proposed by Gunns, which was derailed when New Zealand billionaire Richard Chandler pulled out. Gunns said yesterday that some elements of the new proposed capital raising, which could involve a placement of shares to new investors, were still to be finalised.
Consequently, Gunns requested that its shares remain suspended from trading and said it would provide a further update on April 2.
Gunns, which wants to develop a controversial A$2.5 billion pulp mill at Bell Bay in Tasmania, said it would seek to raise enough money to significantly cut its debt and strengthen its balance sheet.
"Investors have encouraged the company to raise sufficient equity capital to provide it with the desired flexibility in its approach to financing the Bell Bay pulp mill," Gunns said. "Additional financial flexibility is likely to result in a superior outcome in the pulp mill financing.
