Likely era's end for wool exporter
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 firms.
An announcement to the market yesterday 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 some shareholders had expressed disappointment that they were not given the opportunity to buy out the receiver's shares.
The board had investigated 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 it was completed.
"From the outset this company has been dogged with capital and ownership issues," Kirke said.
"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 that shareholders accept WSI Holdings' offer.
They reasoned that the receivers had accepted WSI Holdings' 45c a share offer as the best available; WSI Holdings would have a 75 per cent controlling stake in Wool Services once conditions were 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.
Wool Services reported a $2.238m net profit for the year to June 30, 2012, below last year's record profit of $6.636m, reflecting unfavourable global market conditions.