Farmers not eager to buy into Wool Services
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.