Woodchipper Gunns Ltd said that it had entered into an exclusive negotiation period with an international forestry investor on Gunns' proposed sale of a $170 million tranche of forest resources.
The negotiation period ends in late October 2008.
Gunns has said proceeds of any sale would be applied to reducing bank debt and strengthening the group's balance sheet.
Under the proposed arrangements, Gunns will retain ownership of the freehold land associated with the standing timber.
Resource supply volumes to Gunns would not be impacted by the transaction, with Gunns continuing to manage the forest and maintaining responsibility for replanting and other activities.
Gunns said it would review further opportunities to expand this program as part of the ongoing management of its capital structure.
Gunns shares were 2.5 cents higher at $1.12 at 1037 AEST on Wednesday.