Wool growers asked for $10m

GERALD PIDDOCK
Last updated 08:29 09/11/2012
Mark Shadbolt
DEADLINE EXTENDED: Wools of NZ chairman Mark Shadbolt is confident the capital raising target will be reached.

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Wools of New Zealand is asking for $10 million from strong wool growers in a capital raising offer to expand its sales and marketing capabilities.

The raising would give strong wool growers the opportunity to invest in a grower-owned sales and marketing, company, chairman Mark Shadbolt said.

The company has made significant inroads into transforming Wools of New Zealand into a commercial entity, aimed at connecting customer to grower, he said.

"In particular we have focused on building commercial relationships with customers, including wholesalers, retailers, manufacturers and spinners and working collaboratively with other players in the industry - both in New Zealand and offshore."

The company launched a capital raising bid along with a prospectus and investment statement last week.

Launched in 1994 Wools of New Zealand was bought by the Wools of New Zealand Trust last year when Wool Partners International failed. It has been supported by a voluntary deduction from wool sales by farmers from their invoices through PGG Wrightson.

Wools of New Zealand exists through 3500 farmers who pay a voluntary fee.

It hoped to raise $10 million, however the offer would proceed with a minimum of $5 million.

"It's not a bricks and mortar offering. Rather it's about partnering with industry participants who view having a stable supply of wool and a relationship with Wools of New Zealand, as a favourable commercial advantage."

Growers who committed would own the brands and benefit from the company's activities in terms of developing supply channels to pull strong wool and its products through to market.

Individual or corporate strong wool growers can subscribe for shares at a ratio of one share for every two kilograms of their annual strong wool production, with a minimum subscription of 5000 shares, at $1 per share.

Growers who have previously paid the wool market development fees and who subscribe according to their annual strong wool production would also be eligible for an additional share for every two shares subscribed for under the offer as acknowledgement of their previous commitment to Wools of New Zealand.

Growers would be required to participate in the Wools of New Zealand integrity programme and to make payment of a wool market development commitment. This would be set at a rate of $0.15 per kilogram of their annual strong wool production.

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They would have to continue this payment until June 30 2018 when it was expected the company would no longer be reliant on this shareholder support.

South Canterbury Federated Farmers meat and fibre chairman Neil Campbell hoped the funds raising succeeded but was skeptical of its chances.

"Previous capital raising for any strong wool venture has been poorly supported by farmers historically.

"I admire what they are trying to achieve but typically cross bred wool growers have been very reluctant to invest in any new initiative and that's why the industry is in the state that its in," he said.

The offer to wool growers closes at 5pm on December 14.

‚óŹ Wools of New Zealand is holding a series of nationwide roadshows to explain the capital raising.

- © Fairfax NZ News

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