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Commercial settlement reached with Gunns Limited

Commercial settlement reached with Gunns Limited

The Premier, Lara Giddings, said today that a settlement had been reached with Gunns Limited to remove its residual rights over native forest contracts.

Ms Giddings said an offer of $23 million was formally accepted by the company this morning.

The process, which involved independent probity auditor Wise Lord and Ferguson, includes a payment of $11.5 million to Forestry Tasmania to achieve the joint objective of settling a dispute with Gunns over outstanding debts and ensuring that native forest contracts are retired into conservation subject to the Independent Verification Process, consistent with the Forestry Intergovernmental Agreement.

 The Verification Process will assess areas of nominated high conservation value forests and the wood supply needs of the industry.

 “The State Government has acted on legal and departmental advice that a commercial settlement is the best way to progress the IGA,” Ms Giddings said.

 “The Solicitor General has advised that settlement is needed to remove the company’s residual rights over native forest harvesting.

 “Similarly, if we did not settle these issues with Forestry Tasmania, these contracts could otherwise have been on-sold and therefore wouldn’t be available for verification of conservation outcomes.

 “The process, and subsequent offers have been reviewed by Wise Lord and Ferguson and a copy of their report is being released today, along with correspondence between the State and the Commonwealth.

 “This resolution means that we have avoided the lengthy delays and costs that would inevitably be incurred if these issues were pursued through the courts.”

 Ms Giddings said the original offer was for $23 million to be shared between Gunns and Forestry Tasmania.

 “This offer was not accepted by Gunns and the State Government acted at the request of the Commonwealth to reengage with the company to resolve these issues, using funds allocated in the IGA.”

 Ms Giddings said while the process to resolve Gunns residual rights had taken longer than hoped, it had not delayed the transfer of much-needed compensation funds to struggling contractors.

 “While we have been working to resolve outstanding issues with Gunns, the Commonwealth has also been finalising the application criteria for the $45 million compensation fund. Money also remains in the agreement for compensable exits for sawmillers.”

 The settlement clears the way to progress other key parts of the IGA, including the independent verification of high conservation values and the wood supply needs for the forest industry.

 “The Signatories to the Statement of Principles have agreed to the outline of the verification process and a list of experts to be approved by the State and Federal Governments to carry-out this important work.

 “I anticipate that an announcement on the members of the verification group led by Professor West will be made in the near future.”

 Copies of the auditor’s reports can be found by selecting the below links.

Probity Auditor's Report on Gunns Limited Settlement

Probity Auditor's Follow up Letter

 

Further information:

Michael Stedman 0438631399