Southern Cross Forest Products, a sawmill company in New Zealand with about 400 employees and about NZ$100 million in annual sales was placed in receivership. Sources: Stuff NZ, Fairfax NZ News, TVNZ
Brendan Gibson and Michael Stiassny of KordaMentha were appointed as receivers of the Dunedin company.
The company has four sites in New Zealand at Mosgiel, Milton, Balclutha and Milburn around Dunedin and another site in Thames.
In 2012, the last figures available, the company generated revenue of just under NZ$95m.
Receivers met with staff at the Southern Cross sites assuring them they would be paid while a buyer is sought for the business.
Gibson said he had spoken to staff throughout the day. He had told them it was hoped the company would be sold as a going concern.
“Certainly at the moment we think it is [a going concern],” Gibson said. “It’s got profitable parts. It’s in a tough industry, but it’s got some good products, some good customers, but obviously the business has got too much debt so we are trying to get it out.
“We’re putting it on the market as a going concern.
“We’re talking to customers at the moment to get their support to do that,” he said, adding that receivers had the support of bankers ANZ to try to find a buyer.
Some 40 sawmills have closed since 2003, according to the New Zealand Forest Owners Association. In October, the Tachikawa Forest Products sawmill in Rotorua was put in receivership with the loss of 120 jobs.
Southern Cross Forestry Products had borrowings of NZ$17.7 million as at the end of December 2012 with ANZ Bank, UDC Finance, 321 Ltd, Hunter Finance and Heartland, according to its latest financial statements lodged with the Companies Office.
Its loans with ANZ and 321 were in breach of certain covenants at the time, and the 2012 accounts were tagged by auditor Deloitte over the company’s ability to trade as a going concern.
After the balance date, Southern Cross Forest Products negotiated a new funding facility with ANZ, which it said would be reviewed in March 2014.
The company narrowed its annual loss to NZ$1.58 million in calendar 2012 from $2.92 million a year earlier, as it booked a NZ$2.34 million gain on the value of a 2009 acquisition.
Revenue climbed 16% to NZ$95 million in 2012, though the gross margin was squeezed to 4.6% from 8.6% in 2011, as the cost of sales rose at a faster pace.
Sawmills elsewhere have recently complained that forest owners are bypassing them to export the logs, while exporters are under pressure from the strong New Zealand dollar.
“It’s been well publicised that the wood processing industry, with the current macroeconomic conditions can be a difficult game,” Gibson said.
As well as selling products domestically, Southern Cross exports logs to Australia, the United States and Asia.
Labour economic development spokesman Shane Jones said the latest development came just days after warnings of a likely restructure of operations in Nelson and Marlborough last week.
A major sawmill had closed down in Rotorua last week.
“The National Government’s forestry policy is akin to a chainsaw massacre,” Jones said.
“The work force has been maimed and the businesses are being ruined.”
The Government needed to establish a “wood first” policy to favour local firms in the Christchurch rebuild, “so that the Crown’s expenditure, a significant proportion of it, goes to sustaining these businesses and employees”, he said.
