Audit of assets of struggling state timber company

An audit of the assets of West Coast forestry company, Timberlands, is under way amid concerns about the crown-owned company's long-term viability.

Timberlands reported an after-tax loss of $8.6 million in the past financial year after a downgrade of the value of its forests and its annual report warns its poor performance is likely to continue into the future.

Timberlands says the sustainable yield from crown-owned pine forests is only about half what was estimated when native logging was stopped by the Government in 2002.

The company employs about 600 people.

State Owned Enterprises Minister Trevor Mallard today said an audit of Timberlands' estate was being conducted to better assess the situation.

"Shareholding ministers discuss SOE portfolio issues regularly and are aware that Timberlands could potentially be facing long-term financial issues brought about by a shortage of timber."

But he said there was no immediate threat to the viability of the company.

"There is no short-term financial issue or any danger of the SOE not being able to meet its contractual obligations."

The Press reported today that options under discussion for the company include selling or transferring it to the West Coast Development Trust or another state-owned enterprise or providing it with a taxpayer-funded capital injection.

Mr Mallard said the Government was not "ruling anything in or out" in relation to what action it might take in regard to the struggling company.

A spokeswoman for Mr Mallard said Timberlands would be responsible for the audit.

- NZPA