Wool in­dus­try poised for re­build­ing ven­ture

South Waikato News - - RURAL DELIVERY -

A new farmer-led ini­tia­tive is poised to re­claim the New Zealand wool in­dus­try and unite farm­ers be­hind a sin­gle trans­par­ent en­tity in what is be­ing seen as a crit­i­cal step to rein­vig­o­rate the sec­tor. The newly es­tab­lished New Zealand Wool In­vest­ment Com­pany Lim­ited (Wool Co) has set out to raise $40 mil­lion in cap­i­tal to buy New Zealand Wool Ser­vices In­ter­na­tional Ltd.

‘‘We need one com­pany and a sim­ple trans­par­ent struc­ture which farm­ers can be proud of,’’ says Cliff Heath, Wool Co chair­man. ‘‘New Zealand wool needs one strong com­mer­cial en­tity that can rep­re­sent our prod­uct in the world mar­ket and that has an in­volve­ment at ev­ery step from the farm gate to the shop floor,’’ Heath says. He strongly be­lieves com­pe­ti­tion at the scours is vi­tal in or­der to main­tain the pro­cess­ing costs charged to farm­ers and to en­sure the fu­ture vi­a­bil­ity of New Zealand wool. Strate­gic wool as­sets, such as the wool scours owned by wool ser­vices, could eas­ily be lost from farmer con­trol if Wool Co does not act quickly, he said. Wool Co is seek­ing to raise $40 mil­lion through an of­fer that will only be avail­able to ‘‘El­i­gi­ble Per­sons’’ as de­fined in the Se­cu­ri­ties Act 1978 and per­sons who other­wise fall within sec­tion 3(2)(a) of the Se­cu­ri­ties Act. A 64 per­cent share­hold­ing in wool ser­vices is cur­rently un­der the con­trol of the re­ceiver of Hub­bard as­so­ci­ated en­ti­ties. This share­hold­ing is on the mar­ket. Fol­low­ing a suc­cess­ful fundrais­ing, Wool Co will look to ne­go­ti­ate an agree­ment with the re­ceiver of the 64 per­cent share­hold­ing in wool ser­vices un­der which the re­ceivers would agree to ac­cept a takeover of­fer for wool ser­vices made by Wool Co. It is in­tended that such agree­ment would then be fol­lowed by a takeover of­fer for wool ser­vices by Wool Co. If the takeover of­fer is suc­cess­ful, it is then in­tended that WEL will, once it has raised suf­fi­cient fund­ing to do so and ob­tained all ap­provals it re­quires, pur­chase the share­hold­ing in wool ser­vices ac­quired by Wool Co re­sult­ing in a merger, of the two pub­licly listed wool com­pa­nies. WEL has over $300 mil­lion of tax losses that trans­ferred af­ter the dis­es­tab­lish­ment of the former Wool Board.

Kevin Arscott, di­rec­tor of WEL says the Wool Co struc­ture al­lows us to raise cap­i­tal re­quired in a timely man­ner and en­ables WEL’s tax losses to be pre­served. A suc­cess­ful merger of WEL and wool ser­vices will min­imise the amount of tax to be paid by the new com­bined en­tity in the fu­ture. Each dol­lar of tax saved was a fur­ther dol­lar that could be rein­vested back into the wool in­dus­try which was in the best in­ter­ests of the grow­ers, said Arscott. ‘‘New Zealand farm­ers have tra­di­tion­ally re­ceived a premium for their wool in the in­ter­na­tional mar­ket due to its qual­ity. A uni­fied ap­proach from grow­ers would help en­sure the premium New Zealand wool had earned was main­tained, said Heath.

KNIT­TING TO­GETHER: A new ini­tia­tive hopes to unite farm­ers who pro­duce wool.

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