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Southern Cross was placed in receivership in early March, owing the ANZ bank $58 million, directly jeopardising 400 jobs.
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 jobs.
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.