MENU

Gunns: Hopes felled or growth ahead?

Gunns Limited (ASX: GNS), once the in the vanguard of Tasmanian industry, and a lightning rod for that state’s environmental policies and activism, has become a shadow of its former self.

From a 2004 high around $4.50, Gunns last traded at $0.16, before the company applied for a continuation of the suspension of its shares this morning.

That 96% fall has been precipitated by the changing fortunes of its Tasmanian mills, high levels of debt and the seemingly endless delays for the company’s proposed Tamar Valley pulp mill, as a result of Gunns’ inability to secure funding.

Hopes of a white knight riding to the rescue have been dashed, with plans for New Zealand-born billionaire Richard Chandler to take a 40% stake in the business having been felled.

The company is now reportedly in talks with its bankers, and has advised the ASX that it plans a capital raising that is ‘material to the company’s financial position and strategy’.

It seems unlikely that Gunns will be able to raise further capital without offering those shareholders a significant discount on the last sale price of the shares, but the deal is necessary to retire some debt and give the company breathing space to right the ship and establish whether Gunns’ existing business model can be sustained, or if changes are required.

An investment in Gunns at this point is truly walking into territory where angels fear to tread – time will tell whether fortune favours the brave, or if Gunns glory days remain well and truly behind it.

If you are looking for ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

More Reading:

Scott Phillips  is a Motley Fool investment analyst . You can follow him on Twitter @TMFGilla.  The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.