Four hundred staff of Southern Cross Forest Products remain
uncertain as to their future. Photo from ODT files.
Time is running out for the 400 staff of Southern Cross
Forest Products - placed in receivership almost six weeks ago -
as receivers decide whether it can be sold as a going concern,
the Amalgamated Workers Union says.
Southern Cross was placed in receivership in early March,
owing the ANZ bank $58 million, directly jeopardising 400
The recent high cost of buying New Zealand logs, because of
Chinese demand, has driven down sawmillers' profit margins to
the point of not being commercially viable.
Amalgamated Workers Union spokesman Calvin Fisher said, when
contacted, the longer receiver KordaMentha took to determine
the company's future, the more the likelihood the company
assets might have to be split up for individual sale.
''Time is running out for those 400 staff. Receivers gave the
impression it could be sold as a going concern, but it could
also be sold in bits,'' Mr Fisher said.
He said included in the mix of assets were forward processing
contracts, which he understood made up to 35% of assets, but
if those contracts were lost, any perceived benefit ''becomes
null and void''.
''Clearly, there's's no appetite for risk from the bank,'' Mr
Fisher said, on questioning the bank holding $58 million in
debt, while estimated assets were $78 million; or $20 million
more than the debt.
While the high log price and near record strength of the New
Zealand dollar still prevailed, the Dunedin City Council
would eventually ''regret'' the loss of 400 skilled jobs and
availability of a sawmill, once log prices declined, he said.
Mr Fisher has in recent weeks urged council-owned City
Forests to supply more logs to Southern Cross, given its
large forest holdings and the implications of losing local
KordaMentha has about three more weeks before being required
to file its first report on the state of the company,
including whether it be broken up and sold, offered as a
going concern for sale, or placed in full liquidation.