Investors lose, jobs are lost
THE thought that collapsed timber company Forest Enterprises Australia (FEA) was the one operation ‘doing it the right way’ will be small compensation for the employees and investors of the company that operated around 80,000 hectares of plantations in Northern NSW and South-East Queensland.
The failure of the Launceston-based company yesterday, which was reportedly $216 million in debt, was a blow to the NSW regional co-ordinator of Timber Communities Australia, Tony Wade.
“They were in it all the way from timber plantation to downstream processing. They were the one company doing it the right way,” he said.
In Mr Wade’s view FEA, which has gone into voluntary receivership, should have been able to trade out of its problems if the banks had continued to support the company.
“They could have traded out of it. As of yesterday they were still discussing finding another source of funding, including a possible merger with another company,” he said.
Mr Wade said FEA had been hit hard during the global financial crisis and had been working hard to repay debt and cut its costs.
“The big problem was the banks pulling out. When you’re operating on an overdraft and the overdraft dries out, you’re in trouble.”
However, Mr Wade said there might still be hope for the company if its administrators could continue the merger talks.
“While it’s unlikely someone’s likely to throw in more dosh in the current situation, I haven’t given up hope on them 100 per cent,” he said.
Mr Wade would not be drawn on whether the model of managed investment schemes underpinning FEA and two other failed timber companies was flawed.
“The global financial crisis had a big influence and it could be this was a flow on from the Great Southern collapse,” he said.
But he did think that there local employees need not be worried in the short term.
“I think it’s in the administrators’ interest to keep thing ticking over as usual,” he said.
“They’ve got nothing to gain from letting the weeds go and running everything down.”
Receivers BRI Ferrier are going through the books and will hold a meeting of creditors on April 27.
The receivers have not responded yet to questions The Daily Examiner emailed to them yesterday about the future of local plantations and the jobs of workers in the North Coast offices of the company.