By Andrew Darby
TWO of the most controversial figures in the Australian forest industry, Gunns chairman John Gay and director Robin Gray, are to quit its board in a reshuffle.
Their departures follow institutional investors' anger over Gunns's dismal recent performance, and intense lobbying against them.
But Mr Gay's shift into the chair of a big new Gunns subsidiary called Southern Star Corporation alarmed environmentalists, as did Mr Gray's decision to stay with Gunns Plantations.
Mr Gay disclosed last month that he was approached by major investors in Gunns to go after a 98 per cent first-half profit drop, but stood against them.
Gunns said in a statement to the ASX last night that he would retire as chairman and director by November, but was now chairman of Southern Star, which would be 51 per cent controlled by Gunns.
Its major assets will be Gunns's extensive eucalypt plantations and the long-proposed $2.5 billion pulp mill project.
Mr Gay was chief executive of Gunns for more than 20 years, overseeing a shift from a small sawmilling and hardware company to Australia's timber giant.
Mr Gray, a former Tasmanian premier, has been a politically skilled board powerhouse.
Gunns earned a reputation for bruising conflict under the present board, aggressively expanding into plantations, stores and vineyards with revenue gained as Australia's largest woodchipper of native forest.
Its hard line climaxed in the Gunns 20 case, in which the company claimed $6 million against environmentalists for an ''over-arching conspiracy'' against them.
After five years the case was finally settled, with payouts to most defendants, and costs to Gunns totalling at least $3 million.
Corporate campaigner for the Wilderness Society Paul Oosting said he did not see any substantial change in the departure of the two from the main Gunns board. ''John Gay remains in charge of a project that is worth five times Gunns's market capitalisation if it comes off,'' Mr Oosting said.
''Robin Gray will still be directing what happens with the plantations. This is very disappointing.''
Industry analyst Robert Eastment said the key question for Gunns would be finding the right person to replace Mr Gay as chairman in tough times.
In February the board said uncertainty over the pulp mill's financing had to end, but yesterday's statement gave no further sign that Gunns was closer to the money.
It appointed as Southern Star's pulp mill project director Timo Pilonen, who built a large-scale mill in Uruguay, in a move that Mr Gay said served to further endorse the project's strategic and commercial merit.
Gunns will also sell about 28,000 hectares of its own native forests in Tasmania, in a step towards achieving the ''social licence'' it needs to receive the Forest Stewardship Council certification increasingly being demanded by its woodchip customers and potential pulp mill partner, Sodra of Sweden.
It said the company was expecting full-year earnings before interest and tax of up to $40 million.