Gunns flags forestry asset write down

The Tasmanian timber company Gunns says it has been forced to revalue its forestry assets because of the ailing woodchip market.

The revaluing of assets includes its 200,000 hectare Tasmanian forest estate.

The company has told the Australian Securities Exchange the declining woodchip market has forced a review of the value of the asset.

The review is still underway and the company has not said how long it will take.

It is unclear what sort of impact it will have on the company's bottom line.

Gunns shares have been in trading halt for more than three months as the company negotiates a plan to raise about $400 million.

Financial analyst Matthew Torenius says it is bad news for shareholders..

"The capital raising was looking like being done quite quickly and has now dragged out substantially.

"You would imagine the terms of any capital raising would have worsened for existing shareholders." The company says the woodchip market has also impacted on its capital raising efforts but confidential negotiations are continuing with "various potential investors".

Pulp and paper analyst Robert Eastment says there is currently an over supply of woodchips.

"The greatest competition that Gunns has is coming from Australia, not from overseas," he said.

"Extensive plantations have been developed in Victoria, Western Australia and even Tasmania.

"Those plantations are being harvested and they are actually selling directly across Gunns, into the same market as Gunns.

Gunns' shares last traded at 16 cents.

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