New Zealand Wool Investment Company (Wool Co) has set out to raise $40 million in capital to buy New Zealand Wool Services International (WSI), hoping to emulate the success of Fonterra.
Wool Co is a new entity, jointly owned by publicly listed Wool Equities Ltd (WEL) and Christchurch-based investment bankOcean Partners.
Wool Equities was formed after the disestablishment of the New Zealand Wool Board in 2003 and has more than 9500 farmer shareholders.
In July it announced that it had funding for a rival bid to Cavalier Wool Holdings' offer of $40 million for the assets of WSI.
The High Court has temporarily delayed any sale of WSI to Cavalier until there is an outcome to a challenge from transtasman carpet-maker Godfrey Hirst to the Commerce Commission's approval of Cavalier's offer.
Cavalier applied for clearance from the commission after it was announced a combined two-thirds stake in WSI was on the market after the receivership of two Allan Hubbard-related companies - Plum Duff and Woolpak.
If Wool Co raises the funds, it plans to make an offer to the receivers of Plum Duff and Woolpak for the WSI shares.
If the offer is accepted, it is intended that WEL will then purchase the shareholding from Wool Co, resulting in a merger of the two publicly listed wool companies.
WSI chairman Derek Kirke has said the WEL proposal was not a WSI initiative and the board of WSI learned about it at the same time as the public.
WSI has reported pressure from a number of its shareholders and other investors, who were keen to avoid a Cavalier Wool Holdings wool scour monopoly, to proceed with a WSI capital raising. Mr Kirke said the matter was under consideration.
Kevin Arscott, director of WEL, said a unified approach from New Zealand wool growers was needed. "Fonterra have shown what is possible when farmers are unified in the international markets. It is time for wool growers to follow the way," he said.
A full takeover of WSI would require a 90 per cent shareholder approval.
