About 500 employees of the Tasmanian timber company Gunns could lose their jobs after the company entered administration.

Gunns is appointing an administrator after telling the stock market on Tuesday it has become unable to cover operating costs and pay its debts.

Its banks have refused to extend more than $500 million worth of loans.

The company employs about 500 people across Tasmania and at three sites interstate.

Tasmania's Deputy Premier Bryan Green says there will be job losses but says it is up to Gunns to declare how many jobs will go.

Mr Green says the company notified the Government about the move into administration late last week.

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

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

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

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

Shadforth Financial Group analyst 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," he said.

The forestry union's Danny Murphy has met Gunns workers in the state's north, including 50 who were due to be made redundant from hardwood processing jobs later this week.

"They just wanted to be guaranteed their entitlements and we'll be pursuing those assurances in writing," he said.

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

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 4 minutes 36 seconds 4 m 36 s Where to from here for forestry in Tasmania? ( Martin Cuddihy ) Download 2.1 MB

Ed Vincent from the Forest Contractors Association blames market pressures for the company's demise, mainly the high Australian dollar.

"A lot of businesses have been doing it very tough and certainly Gunns is no exception to that," he said.

South Australian Treasurer Jack Snelling says his Government is investigating what can be done to safeguard at least 160 jobs at the Gunns' timber mill at Tarpeena.

He says part of a $27 million taxpayer package rejected by timber company Carter Holt Harvey could be re-directed to help Gunns' workers.

"The Government's very mindful of the importance of the milling industry to the south-east," he said.

"We want to make sure those jobs are protected so we're looking at a package basically of assistance."

At it peak eight years ago Gunns employed 1,200 people.

The company will not comment further on the announcement.