Woodchipper Gunns will make up to $280 million with the issue of new shares to New Zealand billionaire Richard Chandler.
Gunns said it had agreed commercial terms with Richard Chandler Capital Corporation for a rights issue of 1.3 new shares for every one share.
The proposed terms of the deal are non-binding and subject to approvals from the Australian Securities Exchange and Gunns shareholders.
The proceeds of the capital raising venture will be used to reduce the company's debt, Gunns said.
Mr Chandler currently has investments in companies in Asia, Africa, Latin America and Europe, in a range of industries.
Richard Chandler Corporation senior adviser Alan Kelly said the corporation would work with Gunns to facilitate the development of Tasmania's Bell Bay Pulp Mill.
'We believe it will make a significant long-term contribution to the Tasmanian and Australian economies,' he said in a statement on Wednesday.
A meeting is expected to be held in late April at which shareholders will be asked to vote on the proposed deal.
