Logging trucks at Nelson.
Log transport company Waimea Contract Carriers, has been placed in voluntary administration owing NZ$14 million, with the possibility of closure not ruled out. Source: The Nelson Mail
The firm has 120 staff – 90 in Nelson and 30 in Blenheim – and is one of the south’s largest privately owned local transport operator.
It has a fleet of 80 trucks and transports logs for Nelson Forests, Hancock Forest Management and Nelson Pine Industries.
John Fisk and Richard Longman, partners of PwC, were appointed administrators of the company.
They held a meeting with staff telling them it was business as usual, while they assessed the options available to rehabilitate the business.
They would get paid as normal this week.
“I cannot say if some sort of restructuring is likely; it could be, but it is too early to tell,” Mr Fisk said.
The administration places a moratorium on creditors from taking any action.
“The administrators will seek to work with the company’s clients to continue to support their forestry activities,” he said.
“During the moratorium period, we will be focused on developing a plan that, we hope, will result in returning the business to viability.”
Essentially the costs of the business had continued to rise, he said.
“With an emphasis on health and safety, the need to replace fleet, those costs have not been able to be met.”
Mr Fisk said it was too difficult to say yet whether it was a forestry industry problem or specific to Waimea Carriers.
Asked if they would be looking to renegotiate the company’s main contracts, Mr Fisk said: “Anything is potentially on the table, I would not rule that out.”
The company debt has climbed to NZ$14m but will not be finalised until all the creditors’ claims are in.
Asked if the business could fold, he said: “Yes. If our review does not produce something that is viable the next step could be liquidation of the company. That’s a possibility but it’s early days, we’re taking one step at a time.”
A first meeting of creditors will be held on April 13, and a watershed meeting 25 days later.
“Waimea Carriers, with 120 employees, is a significant business for the region, and support for the business in the current state is important so it can get back and be viable,” said Fisk.
“There’s no shortage of demand for its services, that’s not the issue, we’re trying to get it to the level where it can be profitable and viable.”
Closure was a worst-case scenario, he said. “We are trying very hard to avoid that.”
According to Mr Fisk it had been a difficult decision for the company directors to put it into voluntary administration.
The directors are Jenny McIntyre of Brightwater and Peter McIntyre of Richmond.
A Nelson forest industry source said he didn’t know of Waimea Contract Carriers’ difficulties but they might be related to the purchase of another business last year.
He said the industry had endured a downturn in December that meant many lost days for logging crews, which in turn would affect the carriers.
The China-driven national slump in export log prices which brought about the December decline would take until the May to recover from, with export prices still low and predictions that they will drop further.
The company was the biggest log carrier in the top of the south and others would struggle to pick up the work if it had to close, he said.
Forest Industry Contractors Association secretary John Stulen said the Nelson company was the second to hit financial problems in a few weeks, with a big Gisborne log carrier having much of its equipment suddenly repossessed, stopping it from operating.
“There’s just so much [log] inventory in China. It’s a matter of how long it takes to go down,” he said. Mr Stulen said that export prices had eased 15-20%.
New Zealand was the biggest log exporter to China and there were further fears stemming from the devaluation of the Russian rouble, making Russian logs cheaper for Chinese buyers.
“There’s some people saying that China is going to pick up, but there’s a lot of people saying that China’s got a lot of unsold buildings. All this wood only gets used when they’re building infrastructure,” he said.
The depressed prices were also putting pressure on logging contractors.
