GUNNS has made a narrow escape after recently confirming it will not be in breach of its debt covenants at the end of the month but analysts say the Tasmanian timber company is still on shaky ground until its debt is lowered and complex restructure is completed.
Two weeks ago it appeared Gunns was not going to be able to dodge a breach in its debt covenants at June 30 but, after gaining clarity about its earnings for managing Great Southern's timber plantations, a breach seems to have been avoided.
Chief financial officer Wayne Chapman said the $8 million initially estimated related only to the fair value of receivables and standing timber it acquired under the transaction with the failed manage investment scheme operator but did not take into account projected income, The Australian Financial Review reports.
Gunns estimates it will receive $30 million in managed investment scheme earnings this year, allowing it to increase its earnings guidance, thereby avoiding breach of its debt covenants.
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