Hundreds of Otago workers face an uncertain future after Southern Cross Forest Products Ltd was placed in receivership yesterday.
The company is one of New Zealand's largest processors and manufacturers of pine products, and has corporate headquarters in Dunedin.
It owns sawmills and pine manufacturing sites in Mosgiel, Milburn, Milton, Balclutha and Thames.
The majority of its 400 staff are in Otago.
Brendon Gibson, of receiver KordaMentha, said there were no planned redundancies at this stage.
He visited all Otago sites yesterday to tell staff of the receivership.
Mr Gibson said the business would be advertised for sale as a going concern, and operations would continue as normal in the meantime.
"We are working with a very strong management team to keep the business trading profitably while we run a sale process.
"We'll put all of the business up for sale and then people can decide if they want to bid for the lot or anything individually."
He would not say how much debt the business owed.A financial analysis of the company will be prepared and published within two months.
"It's fair to say that the business has struggled in the macro-economics of wood processing at the moment and as a result of that has too much debt. It's been decided the best thing to do is try and sell the business as a going concern by receivership," Mr Gibson said.
The company's last financial statement, published in July, showed it owed $57.9 million and had assets totalling $78.8 million as at December 31, 2012.
It said the company was in breach of its banking covenants with ANZ Bank and 321 Ltd, and had negotiated a new funding agreement with ANZ to meet its 2013 budget.
The funding agreement came up for review this month.
The financial statement said directors were aware of risks with future trading losses, but expected to be able to meet financial requirements by March 2014 and have the funding agreement extended.
The New Zealand Forest Owners Association said about 40 sawmills had closed throughout the country since 2003.
Southern Cross Forest Products managing director Tom Whitefield, of Dunedin, did not return calls yesterday.
Clutha Mayor Bryan Cadogan said his heart went out to the company, its staff and their families.
The business was a strong supporter of work programmes and a major employer in the region, he said.
"While we hope for the best, we'll certainly be trying to make sure we mitigate against any impact on individuals in the community."
Southern Cross Forest Products facts
• One of NZ's largest processors/manufacturers of pine.
• Corporate headquarters in Dunedin.
• 400 staff at six manufacturing sites in Mosgiel, Milburn, Milton, Balclutha and Thames (2).
• Offices in NZ, Australia, US, China.
• Placed in receivership March 3, 2014.
• For sale as a going concern.
• Assets totalling $78.8m as at December 31, 2012.
• Debt of $57.9m as at December 31, 2012.