Capital raising target 'in sight'

DEADLINE EXTENDED: Wools of NZ chairman Mark Shadbolt is confident the capital raising target will be reached.
DEADLINE EXTENDED: Wools of NZ chairman Mark Shadbolt is confident the capital raising target will be reached.

Wools of New Zealand has got close enough to reaching its minimum capital raising target of $5 million that it has extended the deadline for strong wool farmers to buy shares to February 25.

The attempt to commercialise WNZ into a sales and marketing company passed the original close-off for share buying last Friday, but trust directors were encouraged enough by the interest to give them more time.

By yesterday $4.1m had been raised from 552 growers representing about 12 million kilograms of wool production a year.

Farmers have continued to buy shares this week although it appears larger corporate farms such as Government-owned Landcorp have held off until more interest is realised.

The aim remains to raise $10m and 20-plus million kilograms of wool production for WNZ to pursue international marketing and sales strategies.

Chairman Mark Shadbolt said the offer was close to reaching the minimum and directors were confident it would be reached from farmers indicating that they would subscribe.

He said WNZ realised the industry was short of capital and farmers had become weary of previous attempts failing, but, directors were determined to make it happen.

"Every day we are seeing applications so it's growing by the day. We had a real surge last week and early this week and they are still flowing in which is encouraging, but we have yet to reach our minimum . . . We are within reach and have to keep the momentum moving."

Shadbolt said farmers under a heavy workload at this time of the farming year had praised the capital raising extension.

He said the $1.8m of loans to be repaid, including for the buying of Wools of New Zealand and other brands by a trust, did not appear to be a deterrent.

"I think there is a shortage of cash and there is frustration that previous initiatives have not got started."

Some farmers had indicated they would subscribe once their lamb cheques were received. Low returns from both wool and lamb and pressure on cashflows were preventing other farmers from putting more consideration into the offer.

Shadbolt said the financial pressure highlighted the need for farmers to influence the long term viability of the sheep industry by investing outside the farm gate.

WNZ recognised talks with corporate wool groups would take more time.

Shadbolt said Landcorp had yet to commit to the offer.

"There is probably 50 to 60 large growers and groups we are focusing on and that includes some of the Maori corporations, but on saying that there is a large number of growers yet to engage."

He said WNZ was as much for the average farmer as the "big boys".

Talks would continue with the Wool Equities group on top of as many as 10 meetings held previously. Landcorp and other large groups appear to have taken the view that a majority of farmers is needed for a co-operative to work.

Shadbolt said the plan was to get WNZ off the ground after many initiatives had failed and build numbers.

The Banks Peninsula farmer has been working weekends and nights on his farm during the capital raising and received help from his sons.

"That is one of the reasons why I push so hard because I want farming to be worthwhile for them."

WNZ will start off by renewing contact with farmers and talking to more farmer groups after the Christmas break. Farmers' cheques had, meanwhile, been banked and were being held in a trust.

The volume of wool farmers had committed to shares so far was beyond WNZ expectations.

About half of the subscribers had committed to buying one or more shares for every two kilograms of their annual strong wool production with the rest choosing the minimum share offer of $5000 at $1 each.

The Press