The timber company is trying to secure several asset sales including its estate in the Green Triangle region of South Australia and Victoria, which will provide proceeds of $120 million to be put towards debt reduction, The Australian Financial Review reports.

Days before Christmas, Gunns downgraded its full-year underlying earnings before interest and tax to $30 million from $40 million to $50 million previously.

It said operating performance from the softwood sawmills at Bell Bay and Tarpenena was being impacted by the downturn in the housing sector.

It also requested an extension of its key funding facilities due to expire at the end of the month.

Finding a partner for the $2.3 billion pulp mill at Bell Bay is proving hard amid tightening global credit markets and falling pulp prices.

Asset values are also being reviewed and Gunns has tipped its standing timber and interest in MIS schemes would be reduced by almost $90 million pre-tax.