Receivership means forest may be sold

By PAM GRAHAM

The appointment of receivers to Huaguang Forests means the biggest forest estate in the Gisborne region is likely to come on the market.

Brendan Gibson of receiver Ferrier Hodgson said the priority had been to keep the business running, which had been achieved. The next stage was to look at selling it.

The prospect of a sale of the 33,000ha estate comes as Fletcher Challenge Forests is selling its 106,000ha estate and the 165,000ha Central North Island Forest Partnership estate is also on the market.

Fletcher is evaluating offers from The Campbell Group, a US-based timber management company and Kiwi Forests, a consortium of local investors and US-based Prudential Timber Investments, another timber management company.

Ferrier Hodgson is also the receiver of the CNIFP.

Huaguang bought its forests from Rayonier in 2002. The harvest under Rayonier ownership was as much as 850,000 tonnes of logs a year, virtually all of which was exported through Gisborne's port.

Huaguang was owned by Chinese business interests based in Guangdong province.

They had approached Rayonier to buy the forest, or the right to harvest under Crown Forest Licences, to secure wood supply for processing plants in China.

The estate is relatively mature but is situated on hilly, and in some parts unstable terrain, increasing harvesting costs.

Though Huaguang employed only 16 people, it provided work for contractors and was a large customer of Gisborne port.

Forestry contractors have been affected buy a cut in harvesting by some companies prompting Economic Development minister Jim Anderton last week to tell the industry it was "damaging its people".

Forest owners say their business is being damaged by the high kiwi, weak export prices and high transport costs.

According to the Timber Industry Federation, the New Zealand dollar value of logs exported in July was 30 per cent down on last year and sales to Japan and Korea were worth about half of last year.

New Zealand lumber production was at a record in the June quarter but the domestic market is small.