The New Zealander's private Richard Chandler Corporation confirmed today it was taking a stake in Gunns, and would seek to "catalyse" the long-planned $2 billion plus Bell Bay pulp mill.

Gunns shares shot up 60 per cent,or 7.5 cents, to 20 cents on the news.

RCC will become Gunns' major shareholder, with 39 per cent of the company.

Gunns also plans to raise about $130 million in a 1.3 for one share rights issue at 12 cents a share.

"In combination with the company's current asset sales program, the proposed recapitalisation will facilitate a further signification reduction in company debt," Gunns said in a statement.

RCC is to subscribe a $75 million bond with attaching convertible warrants, and gain the balance of its investment through fully paid ordinary shares in Gunns also at 12 cents.

"Gunns has been restructured over the past few years into a world scale plantation forestry company," said RCC senior adviser Alan Kelly.

"We see its future as building a foundation for sustainable development and economic growth which will provide a future for the Tasmanian forestry industry," Mr Kelly said.

"The Richard Chandler Corporation proposes to work with Gunns management to catalyse the Bell Bay pulp mill.

"The pulp mill project is expected to create over 3,000 jobs, significant bio-energy power generation, strong export revenues and approximately $1 billion in federal and state taxes."

The re-capitalisation follows renegotiation of Gunns' $340 million senior debt facility last week.

A series of asset sales is also under way, including the Heyfield native forest sawmill in Victoria, Gunns' $85 million Managed Investment Scheme loan book, and the sale of its woodchip ship, Orana. FIRB approval is also outstanding for Gunns's $120 million Green Triangle forest estate assets.

The deal is conditional on approvals, including from a shareholders' extraordinary general meeting, within 90 days.