ANZ Denies Financing Gunns Deal

Submitted by Craig Strzelecki on 30 May, 2008 - 10:04

ANZ confirmed that it has finally pulled out from the Gunns deal. It had been under pressure from the conservationist for not funding the $2 billion Tasmanian pulp mill project. ANZ did not give any reason for pulling out of the deal and the Tasmanian government also refuses to comment on ANZ’s refusal. However, the Deputy Leader of Opposition states this refusal as only a minor hiccup. The Federal Environment minister Peter Garrett states that financing such a project is entirely a matter for the Gunns and not the Federal government.

Gunns Ltd. chairman, John Gay, acknowledged the withdrawal by issuing a statement to Australian Securities Exchange. He also added that the deal is still "continuing on schedule with strong international interest in the financing". However, he did not state any specific financing company for the development of his project. He also states that the company shall continue to have long term and corporate banking relationships with ANZ in future.

ANZ had been Gunns banker since past 15 years and one of the biggest banks in the financing consortium. It is expected that Macquarie bank may take up the project after ANZ’s refusal. After losing support from its most reliable and oldest banker, Gunns is now seeking international financing. Any international financing or funding would leave the company and its project open to exchange rate fluctuations. Any international funding agency would also take the community opposition as the risk factors while offering finance to Gunns Ltd. which may not be in favour of the timber company. ANZ withdrawal may also portray the project as risky and any funding from external agency would spell into stricter financing deal for Gunns Limited.

Opponents of the mill including the Greens in Tasmania welcomed ANZ gesture. Several environmentalists and conservationists of the forests had strongly lobbied to force ANZ to pull out of the mill deal. On the other hand, the project is strongly backed by federal Labour and the Coalition in Australia and has equally strong support from the Tasmanian government as well.

Speculations about ANZ pulling out of the deal had already made Timber Company’s share tumble down by 6 percent.

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