Wool Equities shareholders vote in favour of biotech focus

By NZPA

Friday 2nd November 2007

Wool Equities shareholders have come out in favour of the company's strategy to invest in biotechnology, voting against five board nominees wanting to focus on commercial wool growing.

Shareholders re-elected William Kermode, Alistair Polson, Keith Sutton and Joachim von Roy to the board at yesterday's annual meeting.

Shareholders also voted down a no-confidence motion in the board, and a resolution that Wool Equities cease its reliance on its biotechnology investments in favour of a portfolio of commercially profitable wool-related, value-adding investments.

Farmer-owned Wool Equities has been dogged by conflict between a group of disgruntled shareholders, which has made a series of complaints to the NZX and Securities Commission about corporate governance and management.

Spun off from the New Zealand Wool Board, Wool Equities has sold businesses and invested heavily in its Keratec subsidiary which creates products such as cosmetics and medical applications from keratin -- proteins extracted from wool, and the main constituent of skin and hair.

Keratec is also working with a United States company exploring a range of uses for keratin in plastics, building materials and other materials in place of petrochemicals.

Wool Equities is also investing in its subsidiary Orico, which is working on solutions for wound healing and muscle wasting diseases.

The company had no debt and $10 million cash at the end of June to fund investment in Keratec and other obligations, lower than the $11 million expected because of costs associated with the dissenting shareholder complaints and the exit of the former chief executive, chief executive Elizabeth Hopkins said.

Wool Equities has invested about $9m in Keratec in the last three and a half years, and expected to invest a further $3m this financial year. The company targeted one or more sales to large customers by December 2008.

The company posted a net loss of $1.9m for the year ended June, mainly due to ongoing Keratec investments and group operating costs. That was an improvement on the previous year's $2.7m loss.

"We are unable to accurately forecast the level of profit or loss for 2007/08 at present but anticipate a significantly greater loss than in 2006/07, reflecting ongoing Keratec investment," Hopkins said.

The company expected to raise capital in 2008 to fund the business, and would consider options and the amount to be raised early next year.

Keratec and its US partner Keraplast recently signed a licensing agreement with US tissue bank AlloSource to jointly develop a keratin-based bone healing putty. Development and market approvals are expected to take six to nine months, with the new product available shortly afterwards.

The size of the deal was not large, but it was a first step into the lucrative biomedical sector, Hopkins said.

Shares in Wool Equities were up 8c, or nearly 13%, at 70c, having traded between 50c and $1.25 in the last year.

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