Optimism for Wool Services' future
Wool exporter and processor Wool Services International held possibly its last annual meeting in Christchurch yesterday as Australian wool merchant Lempriere Holdings progresses a $31 million takeover of the company.
WSI Holdings, an associated company of family-run Lempriere Holdings, made a formal offer of $31m or 45c a share to New Zealand Wool Services International shareholders in October.
WSI Holdings had already secured 75 per cent of Wool Services shares through "lock-up" agreements with the receivers of two Allan Hubbard-associated companies.
An announcement to the market on Monday reported WSI Holdings had secured 79 per cent of the shares in Wool Services.
Addressing a small group of shareholders at the company's meeting in Christchurch yesterday, Wool Services chairman Derek Kirke said a number of shareholders had expressed disappointment that the shareholders were not given the opportunity to buy out the receiver's shares.
The board had put "considerable time" into investigating that option and had found the costs and risk of failure were high. Even if a capital raising had been successful, the receivers' stake could have been sold before the capital raising was completed, he said.
"From the outset this company has been dogged with capital and ownership issues.
"While in some ways it is the end of an era, should the takeover proceed, it is our view this company will be even more successful with a well-resourced single owner."
In the target company statement, independent directors Kirke, Herbert Govan, David Houldsworth and Peter Jackson recommended shareholders accept WSI Holdings' offer.
Reasons for the recommendation were that the receivers had accepted the 45 cents a share offered by WSI Holdings as the best available; WSI Holdings would have a 75 per cent controlling stake in Wool Services once conditions are met, and the offer was near the high end of the value range given by the independent adviser for Wool Services shares.
"WSI Holdings have assured wool growers and the wool industry that they intend to continue to operate this company as New Zealand's only merchant wool scouring operation."
WSI Holdings has said previously it has no intention of selling the company's scouring assets to rival Cavalier Wool Holdings.
Cavalier last year bid $40m to acquire the scouring assets of Wool Services International. If successful, Cavalier would have gained a monopoly over New Zealand's wool-scouring industry.
If the conditions of the takeover offer were met, including Overseas Investment Office approval, yesterday's annual meeting would be Wool Services' last, Kirke said.
Wool Services reported a $2.238 million net profit for the year to June 30, 2012, below last year's record profit of $6.636 million reflecting unfavourable global market conditions, the company said. Fairfax NZ