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Farmers asked for $65m to fund new wool company

Wool Partners Co-Operative is seeking $65 million from growers in a do or die bid to dominate the strong wool industry.The new company has been created to be a 100% farmer-owned entity replacing Wool Partners International, owned by Wool Grower Holdings a

Liam Baldwin
Wed, 20 Oct 2010

Wool Partners Co-Operative is seeking $65 million from growers in a do or die bid to dominate the strong wool industry.

The new company has been created to be a 100% farmer-owned entity replacing Wool Partners International, owned by Wool Grower Holdings and PGG Wrightson.

Wool Grower Holdings was described as a shelf company during a media briefing this afternoon outlining the launch of its prospectus, however it still owes PGG Wrightson about $12 million it borrowed to fund its stake in WPI.

Wool Partners Co-operative chairman Jeff Grant, also chairman of Wool Grower Holdings, said the loan was not a factor in the new co-operative. It was unclear how it would be repaid.

In addition, WPI owes PGG Wrightson about $4 million in accumulated interest on 17.5 million preference shares held by the company.

At least 50% of New Zealand’s sheep farmers representing 65 million kilograms of strong wool production would need to sign up with the new company before the end of November in order for it to go ahead.

Initially farmers would be asked to pay 20c a share for every kilogram of wool produced in the previous season and a further 20c by May 31 next year.

Mr Grant said that would raise $26 million and $17.7 million of that would buy the services provided by WPI, which would then cease to function. PGG Wrightson would stay involved as a logistics and warehousing provided through New Zealand Wool Handlers, which is not included in the purchase.

Essentially, the new farmer-owned company would control ownership of the wool, marketing, the Wools of New Zealand brand and exporting capability.

Mr Grant said the 50% commitment from woolgrowers was a fundamental component of the proposal and while it was recognised as a high hurdle, the directors of the company, including Wool Partners International chairwoman, former Telecom chief executive Theresa Gattung, were confident it could be achieved.

Director Mark Shadbolt said the nominal share value of $1 was tailored to be as soft as possible and would represent an average cost of farmers of about $15,000 to $20,000 over fire years.

“If growers don’t [support the proposal] they are letting themselves down and their neighbours down,” he said.

Mr Grant said the proposal was the first commercial opportunity presented to growers after and endless processions of reports into the industry and, more recently, the creation of the taskforce sparked by Agriculture Minister David Carter.

Supplier shareholders of the new company would have to provide their entire wool clip to the company.

Liam Baldwin
Wed, 20 Oct 2010
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Farmers asked for $65m to fund new wool company
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