Hon Jim Anderton
Minister of Agriculture and Forestry
Hon Trevor Mallard
Minister for State Owned Enterprises

8 February 2008
Media Statement
Embargoed until 10am

Timberlands future announced

State Owned Enterprises Minister Trevor Mallard today announced that the assets of Timberlands West Coast Ltd are to transfer to Crown Forestry as the SOE can no longer operate as a successful business.

"The recent audit of the forestry estate, which was completed in late 2007, shows that future annual harvest yields are significantly below earlier estimates due to difficult growing conditions on the West Coast and severe losses due to wind damage," Trevor Mallard said.

"Timberlands has had poor financial results for a number of years, and the revised harvest forecasts mean that Timberlands would continue to operate at a deficit for at least 10 years. As a result, Timberlands is no longer able to fulfil its obligations under the State Owned Enterprises Act 1986 to operate as a successful business and will be wound up once the transfer to Crown Forestry is complete. Due diligence will be undertaken before the transfer is done.

"The transfer of the assets will not stop supply to the industry in the short to medium term, and it will be business as usual for Timberland's sawmill customers. The maintenance, harvesting and replanting of trees will continue and Crown Forestry will continue to meet Timberlands contractual supply obligations.

"Cabinet has asked Crown Forestry to undertake its own assessment of the forestry estate over the next two years, and report back to Cabinet in mid 2009 with recommendations regarding future supply and replanting."

Forestry Minister Jim Anderton said transferring the assets to Crown Forestry would take advantage of some of the management efficiencies and systems Crown Forestry already has in place.

"Crown Forestry intends to negotiate commercially sustainable supply contracts with West Coast timber mills once the current contracts have expired. Crown Forestry will look to address issues as quickly as possible. The long-term replanting future will be determined over the next two years as part of its audit process," Jim Anderton said.

ENDS

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