Beleaguered woodchipper Gunns has confirmed that its bankers have given it financial breathing space.
The company said its 10 bankers have agreed to extend the terms of its syndicated debt facility (currently $340 million) and primary working capital facilities until December 31 this year.
The extension is for a period of about 10 months.
Documentation of the extended syndicated debt facility has been executed by all 10 banks that comprise the syndicate, Gunns said in a statement to the Australian Securities Exchange issued after the close of share trading on Monday.
Gunns said the debt facility's balance was expected to be reduced progressively in the course of the 2012 year as the company completed asset sales currently in progress and finalises the Bell Bay pulp mill project investment in northern Tasmania.
"The finance facility extension provides the certainty necessary for the continued implementation of the company's business strategy as outlined at the recent annual general meeting," Gunns said.
Gunns in December slashed its expected earnings by up to $20 million, saying it expected underlying earings before interest and tax (EBIT) to be $30 million for the 2012 financial year.
That downgrade came three months after it forecast it an EBIT of $40 to $50 million.
The company is in the process of settling the $120 million sale of its Green Triangle Forest Estate, which will go towards debt reduction.
Gunns' share price on Monday was 10.5 cents and compares with around 80 cents at the end of 2008.
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