Wool Equities says has funds for WSI offer

NZPA

Monday 11th July 2011

A further twist has been added to the fight over the future of the wool scouring industry.

Wool Equities chairman Cliff Heath today said the company had secured significant funding to enable it to put in an offer for scouring operation Wool Services International (WSI) on behalf of wool growers.

Wool Equities was close to announcing details of how growers could take an ownership stake in the opportunity, Heath said.

On Friday, the High Court temporarily stayed the sale of WSI to Cavalier Wool Holdings until there was an outcome to a challenge trans-Tasman carpet-maker Godfrey Hirst had made to a Commerce Commission approval of the deal.

Godfrey Hirst general manager Tania Pauling said her company was relieved that WSI’s business could not, ahead of an appeal, be dismantled by Cavalier as it sought to extract monopolistic benefits.

Godfrey Hirst, which bought the assets of Feltex New Zealand out of receivership in 2007, mounted its appeal against an approval given one month ago for the creation of a monopoly in the nation's wool scouring.

Cavalier wants to re-locate WSI's scouring plants from Kaputone (near Belfast, north of Christchurch) to Timaru and from Whakatu to Cavalier's nearby plant at Awatoto, between Napier and Hastings. Cavalier would also mothball scour lines at its own Clive -- in the Hawke's Bay -- and Timaru plants, and take over WSI's 50 percent stake in the Lanolin Trading Company.

The purchase and rationalisation would leave Cavalier Wool as the nation's only remaining wool scourer.

In today's statement, Wool Equities' Heath said farmers should own critical wool assets such as WSI, and Wool Equities -- which said it has 7800 farmer shareholders -- was doing all it could to help that happen.

"If Cavalier is allowed to purchase WSI we would be left with a monopoly. With wool prices stronger than they have been in over 20 years, enabling one entity to dictate terms would be foolhardy and detrimental to the New Zealand economy."

Also today, Cavalier managing director Wayne Chung said that notwithstanding the stay, Cavalier may continue negotiations provided any agreement with WSI to complete would have to be conditional on the resolution of the appeal and in authorisation being in place by settlement.

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