WNZ capital raising at $5m target
Wools of New Zealand (WNZ) has most likely put a lid on extending its capital raising deadline a third time, after reaching its minimum threshold of $5 million a week before its Monday close-off.
The farmer-owned co- operative is still chasing a $10m target in its share offer, but at least can proceed as a sales and marketing company for strong wool in the carpet and textiles markets.
While tempting to extend the deadline again after the initial close-off point was pushed back from December 14 - and it has another eight- week option at its disposal - chairman Mark Shadbolt feels it should stick to the February 25 deadline.
"Quite honestly the board has discussed it, but we haven't got a view. We are pretty knackered and don't want to think about an extension and want to get on with it. Also, we are not sure an extension would gain a helluva lot as they cost money. Personally I am not in favour of an extension."
Shadbolt said reaching the $5m threshold had encouraged more interest from farmers.
"If we judge it by the number of phone calls today there is some intensity among the growers."
He said some of the founders of WNZ had converted some of their original investment into shares and more farmers had invested to place them over the $5m threshold.
This was not done to get them over the mark, but because they saw the investment opportunity, he said.
"I think we would have [got over the threshold without them], but not as quickly.
The WNZ bid succeeds, albeit on a smaller scale, where many wool merger and capital raising attempts have failed in the wool industry.
This includes the unsuccessful Wool Partners International proposal, which mustered $35m and was light on its target of 50 per cent of all strong wool in New Zealand and $65m goal.
"We have learnt from the past attempts, albeit they were unsuccessful," said Shadbolt. "Our view is to get started and that's the position we are in now. The capital raise end is in sight and we have our minimum and we want to get as many new members as we can now before Monday."
He said WNZ would need to review its position if the share offer reached little beyond the $5m mark and work around the lower target.
"The original objective was to reach $10m and 20 million kilograms. We haven't lost sight of that and we have to keep going to get close to that figure."
After the first December 14 deadline $4.2m of capital and 12 million kilograms of wool was committed.
Federated Farmers is calling on farmers sitting on the fence to throw their weight behind the scheme.
Meat & Fibre chairperson Jeanette Maxwell said the WNZ offer was possibly the last opportunity for the strong wool industry to do something positive to help itself and secure its future.
"In order to survive in today's fast moving global economy, industries need to have strong brand identities. This is what WNZ plans to develop, while also building on existing market connections."
Shadbolt said reaching the minimum threshold had been a much harder feat than expected, in a team effort taking at least four years and not assisted by up and down prices.
"The volatility [of wool prices] has killed us and still kills us and we have to create a productive model in the long term that takes the volatility out. That's important for the growers and the customers because they hate it as well."
Farmers investing in shares have come from throughout New Zealand.