Chandler backs ASX-listed Gunns in capital raising

New Zealand-born billionaire Richard Chandler's investment vehicle will take a cornerstone stake in Gunns as part of the ASX-listed forest plantation owner's capital raising.

The Tasmanian-based company wants to raise as much as A$280 million ($362 million), including a A$130 million pro-rata renounceable rights issue offering of 1.3 new shares at A12c apiece for every existing share owned.

The balance will be made up by a A$150 million placement to Richard Chandler Capital Corp (RCC) comprising a A$75 million bond with attaching convertible warrants and the rest in shares at the same price as the rights issue. Funds raised from the capital injection and Gunns' asset sale programme will be used to repay debt.

The shares soared 60 per cent to A20c during trading yesterday and closed at A17c.

Gunns expected to cut net debt to A$360 million by the end of last month, and extended its bank facility until the end of the year.

As part of a new strategy, it has been selling non-core assets and consolidating timber processing units, as well as working towards completing its stalled pulp mill project.

"We see its future as building a foundation for sustainable development and economic growth which will provide a future for the Tasmanian forestry industry," RCC senior adviser Alan Kelly said.

"The Richard Chandler Corporation proposes to work with Gunns management to catalyse the Bell Bay Pulp Mill."