The Tasmanian timber company Gunns has entered voluntary administration after losing the support of its bankers.

Gunns has told the stock market that it was relying on the support of its lenders to continue paying wages and meet debt repayments.

The lenders have informed the company they will not be extending more than $500 million worth of loans and Gunns is now in the process of appointing an administrator.

In August, Gunns reported a loss of almost $1 billion for the past financial year and its shares have been in a trading halt for more than six months.

In its statement to the ASX, Gunns thanked its employees, past and present.

Timeline: Rise and fall of Gunns Tasmanian timber company Gunns started as a small family operation and became the biggest exporter of woodchips in the Southern Hemisphere, but has since fallen into turmoil. Trace the journey with our timeline

"The company is disappointed that it will not be able to pursue the restructuring transaction which it considers would have delivered a better outcome for the people who have a stake in the company's past and future," the statement said.

Shadforth Financial Group analyst Matthew Torenius says the administrator will determine whether Gunns can continue operating.

"If not, you're looking at a sale of assets and essentially a wind-up of the company," he said.

Mr Torenius says it may well be the end of the company "as we know it".

He says the company still has several existing assets such as softwood sawmills, plantation operations and the pulp mill project in Tasmania's Tamar Valley where site works have been continuing.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 3 minutes 52 seconds 3 m 52 s Timber giant Gunns goes into voluntary administration ( Martin Cuddihy ) Download 1.8 MB

"That will be looked at by the administrators now. I'd imagine they would either look at a program of refinancing the company, if that's possible, or selling off what remaining assets the company has."

Mr Torenius believes shareholders will not see any returns if Gunns is liquidated.

"I think it's fair to say that shareholders have lost all their money that they've put into the company," Mr Torenius said.

'Sad day'

Tasmanian Premier Lara Giddings says it is a sad day but has warned people about dancing on Gunns' grave.

The company's demise has sparked political debate about the future of the controversial $2.3 billion pulp mill project which was touted as Tasmania's biggest infrastructure project.

Greens MP and long-time Gunns detractor Kim Booth was quick to link the announcement to the project.

"This is the final nail in the pulp mill coffin," he said.

But Ms Giddings says Gunns' demise does not spell the end of the project.

"I would say to people be very careful about dancing on the grave because the fact is the resource still exists, the proposal still exists," she said.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 2 minutes 23 seconds 2 m 23 s Financial analyst Matthew Torenius talks to ABC Local Radio Download 1.1 MB

"This demise of this company, the unfortunate demise of this company, may in fact mean that other proponents come forward."

Opposition Leader Will Hodgman blames Gunns' position on prolonged Greens campaigning.

"No doubt you will be celebrating long and hard at this news after decades of tearing the company down," Mr Hodgman said.

He says it is terrible that the "once-great Tasmanian company" has ended up in this position.

Greens Leader Christine Milne says Gunns' collapse means the pulp mill is dead.

She says while the pulp mill permit may still exist, it is worthless.

"Lara Giddings is misleading the Tasmanian people and she should stop it," she said.

"It isn't good for those who wanted the pulp mill and it's not good for those that didn't want the pulp mill."

Long-time anti-pulp mill campaigner Bob McMahon does not believe it will proceed.

He says the state's plantation resource could only support a mill for a few years.

"We've wasted eight years chasing a dream, that's where the impact on the economy has occurred," he said.

"Let's not waste any more, let's get on with our business.

"It's dead, it was always going to be a dud."

Jobs threatened

The company employs about 600 people, with about 320 based in Tasmania.

Matthew Torenius believes the administrator will try to avoid having to liquidate the company.

"If that isn't possible, then you may well see some closures and job losses in the near future."

Tasmania's deputy premier Bryan Green says is up to Gunns to declare how many jobs will go.

"We will work through that as we do in all cases," he said.

"We are there to support Gunns workers, I think we have demonstrated that quite clearly."

"We provided $15 million through the IGA (Intergovernmental Agreement) process to assist Gunns' workers.

"We recognise people are losing jobs through no fault of their own and it's a difficult time."

The Forestry Union's Danny Murphy says workers at Gunns' hardwood processing facility in Launceston are shocked by the announcement.

He has spoken to about 50 workers who were expecting to be made redundant when the plant closed on Friday.

"Basically we've been told very little, except for the company that has been put into administration," he said.

"At this stage the company has given assurances that all employees entitlements for this Friday, that were due to be paid on this Friday, will be paid, and that hasn't changed."

The timber mill at Bell Bay, which employs 120 people, will remain open.

Ed Vincent from the Tasmanian Forest Contractors Association says a combination of market pressures is to blame for the company's financial woes.

"[There's been] the high exchange rate, the issue with export chips coming from a number of other countries and also a large volume of woodchips coming out of plantations within Australia which have all contributed to increasing competition and lowering prices and financial viability across the whole industry," he said.

End of an era

Gunns started as a family-owned building and sawmilling business in Launceston in 1875.

In 1986 Gunns became a publicly-listed company and John Gay was appointed managing director.

In 1999, Mr Gay spearheaded a massive expansion, with the company taking over the assets of Boral in Tasmania and the state's biggest woodchip company, North Forest Products.

By 2004 Gunns employed about 1,200 people, was worth about $1 billion and had a share price of $4.46.

In the same year, the company announced plans for the $2.3 billion pulp mill in the Tamar Valley.

The Gunn family says it has mixed feelings about the company's demise.

Thomas Gunn is the great-grandson of John Gunn who started the company with his brother Thomas.

Mr Gunn says he has spoken to other members of the Gunn family and they all seem to be in two minds about the company entering voluntary administration.

"It is an interesting feeling, its a funny feeling," he said.

"It's sad to see 137 years of the company just written off like that but, by the same token, with the controversy they've found themselves embroiled in over the last few years there are a number of members of the family who will probably be happy to see that all come to an end."

"I think it was a great story while it lasted to see a Tasmanian company rise to being the largest timber company in Australia.

"It hasn't been a pleasant thing over the last 12 months, 15 months to watch it haemorrhaging itself to death."

Launceston mayor Albert van Zetten says Gunns has left a significant mark on the city over the past 137 years.

He paid tribute to the company's contribution, including local employment, charity work and the construction of many of the city's buildings.

"They've employed a lot of people over those years which has been a very significant part of our economy," he said.

He says it is disappointing Gunns' legacy has been overshadowed by the pulp mill debate.

"It's been very divisive, it's been poorly handled, there's no doubt about that and that's been the sad part about the history of Gunns," he said.

"It's had a fantastic history up until probably the last five or 10 years and, in that history, it's had a lot of community backlash as well."