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Wool Services stake likely to be sold by June, receiver says

Friday 17th February 2012

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The 64 percent stake in New Zealand Wool Service International up for grabs should be settled by June, according to the receiver of Allan Hubbard-related companies Plum Duff and Woolpak Holdings.

Receiver Maurice Noone of PwC said he is in discussions with parties keen to buy its majority holding in the listed wool trader and scourer and intends to finalise a deal in the next reporting period, which ends in June.

WSI’s scouring assets attracted Cavalier Wool Holdings, a joint venture between carpet-maker Cavalier Corp, Accident Compensation Corp and Direct Capital Investments, which wants to create a national monopoly and has received sign-off from the antitrust regulator.

“On the back of recent Commerce Commission appeals, we are continuing discussions with interested parties with the intention to reach some form of settlement within the next reporting period,” Noone said in his latest report.

CWH is offering $40 million to take over WSI so it can keep the scouring assets and on-sell the trading business. If the receiver accepted that offer, the failed businesses would attract about $25.6 million, which would cover the $13.8 million Plum Duff owes South Canterbury Finance and the $7 million Woolpak owes the lender, as well as a further $3 million to unsecured creditors.

Noone said any return to the unsecured creditors would rely on the outcome of the sale process.

WSI’s recent dividends have been paid to SCF, Noone said.

NZAX-listed Wool Equities emerged as a counter-bidder, but failed in its attempt to raise capital, while WSI’s board also flagged an intention to raise capital to deal with the shares held by the receivers.

WSI stringently opposed CWH’s overtures, calling it “mischievous and misleading” to claim such a deal would be the saviour of the scouring sector. The company’s first-half profit sank 41 percent to $1.8 million, with a deteriorating global economy and strong kiwi dollar to blame, it said.

PwC’s Noone said he hasn’t received a formal response from statutory managers Richard Simpson, Trevor Thornton and Graeme Carson of Grant Thornton relating to the repayment of an advance to the late Allan Hubbard and his wife, Jean.

“We have reservations around its recoverability,” Noone said.


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