Farm­ers not ea­ger to buy into Wool Ser­vices

South Waikato News - - RURAL DELIVERY -

Sheep and beef farm­ers do not ap­pear to be wildly en­thu­si­as­tic about cap­i­tal rais­ing ven­tures to buy the ma­jor­ity share­hold­ing of Wool Ser­vices In­ter­na­tional (WSI), says Fed­er­ated Farm­ers.

The nearly 64 per cent con­trol­ling stake of the wool scourer and ex­port­ing com­pany, head­quar­tered in Christchurch, is on the mar­ket af­ter Plum Duff and Wool­pak Hold­ings went into re­ceiver­ship.

The only groups to pub­licly an­nounce their in­ten­tion so far are ri­val scourer Cav­a­lier Wool Hold­ings and farmer-owned Wool Eq­ui­ties, while WSI is con­sid­er­ing its own cap­i­tal-rais­ing.

Wool Co is the joint ven­ture be­tween Wool Eq­ui­ties Ltd, rep­re­sent­ing 9500 farmer share­hold­ers, and Christchurch in­vest­ment bank Ocean Part­ners, to raise $40 mil­lion for the pur­chase.

The High Court last month dis­missed an ap­peal against a Com­merce Com­mis­sion de­ci­sion leav­ing Cav­a­lier in a po­si­tion to buy WSI’S wool-scour­ing as­sets, which would give it a mo­nop­oly over the woolscour­ing in­dus­try in New Zealand. Cav­a­lier’s plan is to buy the com­pany’s scours at Whakatu and Ka­pu­tone.

Fed­er­ated Farm­ers Meat and Fi­bre chair­woman Jeanette Maxwell said farm­ers were wary of cap­i­tal rais­ing in the wool in­dus­try af­ter the plug was pulled on the Wool Part­ners In­ter­na­tional (WPI) ven­ture last year to form a large farmer-owned co­op­er­a­tive. She said farm­ers had signed cheques for $39m, only to see WPI lead­ers not pre­pared to go un­der 50 per cent con­trol of the wool sup­ply.

’’The av­er­age farmer these days is go­ing, ‘Just an­other (at­tempt), and why should we try?’ I would have to say there has been a rea­son­able amount of ap­a­thy now. Peo­ple have pre­sented stuff and it’s been suc­cess­ful and then farm­ers have got burnt,’’ she said.

Ms Maxwell said some farm­ers were con­cerned about the prospect of a scour­ing mo­nop­oly and even though the court had ruled that the ben­e­fits out­weighed the dis­ad­van­tages, farm­ers would end up dis­ad­van­taged.

’’On say­ing that, we still have Wool Co on the ta­ble and it may or may not hap­pen. It’s in the farm­ers’ hands and it’s just a shame about WPI, be­cause they set the bridge too high.’’ She said Wool Co and WSI had yet to go to or­di­nary farm­ers for money. A large over­seas com­pany might also be in­ter­ested in the WSI share­hold­ing, she said.

Cav­a­lier said if it was un­able to buy the plants and cre­ate more scour­ing ef­fi­ciency, the do­mes­tic in­dus­try could not be ex­pected to main­tain prices at com­pet­i­tive lev­els to China. Stuff.co.nz

PLUM DUFF: Wool­pak Hold­ings went into re­ceiver­ship.

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