FEA announced to the Australian Securities Exchange that its banks, ANZ and Commonwealth Bank, had taken action against the company following a breach of its banking covenants when it reported a financial loss last year.

FEA had been attempting to refinance $216 million of debt and had been given numerous extensions.

Chairman Will Edwards told the ASX that FEA had been negotiating a potential transaction with third parties to restructure the company via a major finance raising and a merger with an unnamed industry player - understood to be from overseas and not local competitor Gunns.

"Although the company had received non-binding letters of intent that support a due diligence and negotiation process for these transactions, the company has not been able to negotiate a sufficient period of time from the banks to enable these transactions to be progressed to a more definite stage," Mr Edwards said.

"The banks have now advised the company that they are not prepared to agree to a standstill."

The banks had been progressively limiting FEA's access to its overdraft facilities and the remaining $12 million of a $39.5 million capital raising from October 2009.

Administrator BRI Ferrier has been appointed and will decide what to do with the different components of FEA - which include the new $72 million sawmill at Bell Bay and a plantation estate of more than 70,000 hectares involving more than 13,000 investors.

Mr Edwards said that it was extremely disappointing to have to call in administrators because FEA anticipated a future recovery by international and domestic timber and forestry markets.

Gunns holds a 13.6 per cent stake in FEA but did not make a statement about the administration yesterday.

Elders wrote down its 13.5 per cent stake to zero and said it would consider strategic opportunities available to it for its share in the 50-50 SmartFibre woodchip export business joint venture.