Bitter news for creditors of failed forestry company

The axe has fallen for many of the Gisborne region's forestry contractors and service companies still owed about $4 million by Huaguang Forests.

The receivers of Huaguang have confirmed they sold the region's East Coast Forestry assets for $47 million (minus costs) which they say does not allow any payments to unsecured creditors owed more than $49 million. The assets had a book value of $134 million. Industry sources put their market value about $60 million to $70 million at present depressed log prices.

Receivers say poor export returns during the past few months have added to the shortfall.

They expect a shortfall to the secured creditor and, accordingly, no funds for unsecured creditors.

Receiver Brendon Gibson, of Ferrier Hodgson in Auckland, said most of the unsecured debts were to overseas investors in the now-defunct Chinese company. He confirmed about $4 million was owed to trade creditors, most of whom were operating in the East Coast.

It is understood the largest debts are owed to Works Infrastructure, Forest One logging contractors, individual logging truck owner operators and Port Gisborne (now Eastland Port).

Fuel, tyre and other service providers are also expected to suffer.

Murray McLeod, of Coastal Logging, is calling for Government help.

"What is needed is tax relief or interest-free suspensory loans to enable everyone to keep working their way out of trouble."

- NZPA