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Restructuring of Southern Cross Forest Products

24 April 2014

Restructuring of Southern Cross Forest Products

The receivers of Southern Cross Forest Products (SCFP) announced today a restructuring of the South Island businesses.

Receiver, Brendon Gibson from KordaMentha, said: “It is no secret that the company has long struggled to secure sufficient log supplies to feed its South Island mills. That issue has continued to compromise trading in the receivership but performance has now been further affected with fire damage at the Mosgiel mill. The moulding plant at the Mosgiel mill remains open but due to constraints in drying, the company is now only capable of processing lower volumes of timber.”

A fire at the Mosgiel site in the early hours of Friday 11th April caused significant damage. The fire burnt out an electrical system, shutting down kilns and boilers and massively reducing drying capacity for the company.

“Unfortunately, we now have no choice but to close one site – the Rosebank sawmill – to stabilise productivity at the remaining sites. Regrettably, this will mean job losses which we had worked hard to avoid. However, the restructuring will allow the core business to be maintained while the sale process continues,” Mr Gibson said.

The Millstream sawmill will remain operational and the Mosgiel site will continue to service and supply the core United States’ solid wood moulding business.

The receivers are also winding down the SCFP Australian business and exploring options to realise the investment in that business.

“The Australian business has never been profitable. Following a review of the options it was clear that the Australian business cannot be sustained,” said Mr Gibson.

In total, 79 jobs will be lost across the South Island sites.

“Our focus remains on trying to sell Southern Cross Forest Products as a going concern. The restructuring in the South Island does not affect the Thames plants,” Mr Gibson said.

ENDS

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