Farmers take over yarn mill

ALAN WOOD
Last updated 05:00 08/08/2014

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Wool farmers have an agreement in place to buy a Christchurch yarn mill, describing the deal as a "significant" industry event to supply the carpet manufacturing industry.

Christchurch Yarns NZ went into receivership in April with the high kiwi dollar one of the challenges the business was up against at that time.

The dollar has remained stubbornly high since then and yesterday was trading around US84 cents and A90 cents.

The business was originally Christchurch Carpet Yarns and has its production facility based at a leased Sheffield Cres, Harewood property near Canterbury Technology park.

It is understood that the receivers Ashton Wheelans have kept the operation running on a limited basis while they look to sell the business.

When it went into receivership, with about 85 job losses, Christchurch Yarns NZ had a 12-year lease on the site until mid-2016. Westpac New Zealand requested the receivership.

The business was then producing up to 240 tonnes of yarn a month from a factory that had been gradually expanded in the 1970s and 1980s. It was buying 2000 tonnes of wool a year from farmers.

The company bought wool scoured in New Zealand and exported it to markets including Australia, generally for carpet.

Hawkes Bay-based farmer Bay deLautour said co-operative-based group Elders Primary Wool had secured a a conditional purchase of the Christchurch Yarns wool spinning mill and would be looking to take it into wool grower ownership.

"As a wool co-operative and a farmers organisation we're actually rapt that we've hopefully saved it."

He made the announcement at an industry function on Wednesday night. Yesterday he said the purchase would be made by joint venture partners The Primary Wool Co-operative (representing 1200 farmers) and Elders New Zealand. Elders NZ was recently sold to South Island-based Carr Group.

"This is a highly significant event as Christchurch Yarns is the only independent mill of its type left in the southern hemisphere and has technology installed which makes it the only viable yarn supply option for many carpet manufacturing businesses," deLautour said in his speech notes. "Without Christchurch Yarns the prospect is these businesses cease to use wool at all and will convert to 100 per cent synthetics."

The purchase would give wool growers more transparency and enable them to capture more value, which had historically been lost.

He and his son Hamish had recently registered a new company, NZ Yarn Ltd, with the Companies Office to enable the purchase, deLautour said.

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First Union southern region secretary Paul Watson said while there had been some redundancies the receivers had kept on about 29 workers on a contract basis to satisfy export demand.

There had been concern from Australian clients of the yarn maker about where supplies would come from, Watson said.

"We've been after the receiver on a regular basis on what has been the developments and they've been very tight lipped about it all," Watson said.

"There's obviously some commercial sensitivity about it, but something's in the wind."

Any purchaser would be looking at the company in terms of potentially restaffing it and what the order book looked like, Watson said. Prior to going into receivership the mill had been owned by a group of mainly Christchurch investors since 2004. These included National Business Review rich lister Tracy Gough, who has been redeveloping The Terrace retail and office precinct in the central business district with high-profile brother Antony Gough.

Other New Zealand yarn manufacturers have faced problems in recent years. There were job losses from the temporary closure of Summit Wool Spinners' Oamaru plant in early 2013 but new owners have re-employed some staff.

Almost 200 Canterbury spinners workers lost their jobs in 2011 when it was announced the Godfrey Hirst-owned Christchurch factory would not re-open after earthquake damage.

The receivers, Ashton Wheelans, was not available for comment yesterday.

- BusinessDay

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