Woodchipper Gunns expects the sale of its hardwood mill at Heyfield in Victoria to the Hermal Group to be completed after a contract dispute is resolved in court.

Gunns said on Tuesday that it had executed a contract for the sale of the Heyfield mill.

“The company is in dispute with the purchaser in respect of one aspect of the sale contract,” Gunns said in a statement to the Australian Securities Exchange.

“Specifically, this relates to adequate assurance being required by the company that a component of the purchase consideration will be paid in full when due.”

Gunns said the matter was before the Supreme Court of Victoria.

“The company expects the sale to complete when this matter is resolved,” Gunns said.

Gunns had said on May 15 that the sale of the Heyfield mill for an enterprise value of $28 million was expected to be complete in late May 2012.

The sale of the mill would finalise the exit of Gunns from operations based on native forest wood supply.