News

August 19, 2008

Bankers Crumble But Gunns Soldiers On

By Our Agri Expert In Oz

Greenmail has taken on a new meaning at the bottom of the world. Once a favourite tactic of corporate raiders who forced a target to buy back its own shares or face a takeover, greenmail has been refined into an anti-development trick by green activists in Australia’s island state of Tasmania. Rather than threaten a takeover, a consortium of anti-forestry activists has threatened bankers to a A$2 billion paper pulp mill proposed by the country’s biggest timber group, Gunns. One bank has caved in, but others are re-grouping with a syndicate of European banks believed to be close to signing up a debt and equity package for what will be the biggest-ever investment in an Australian economic backwater.

The Australia and New Zealand Banking Group was an early supporter of the Gunns plan for a pulp mill at Bell Bay on Tasmania’s north coast. But, under pressure from the environmental lobby, the bank withdrew two months ago from the mill’s banking syndicate, sending shockwaves through the Australian business community. Worse was to come. Not only did the ANZ walk away from a banking deal, but other Australian banks dodged the issue for fear of angering the lobby groups campaigning against the...