Wool co-op share float may be sinking

Over 70 percent of wool growers will not be applying for shares in the Wool Partners Co-operative float, according to an independent survey by Horizon Research that was commissioned by the New Zealand Council of Wool Exporters.

The HorizonPoll internet survey of 618 respondents was conducted between December 22 and 30 and indicates that the promoters of the Wool Partners Co-operative (WPC) float will fall well short of their aim to sell shares to farmers producing 50 percent or more the country’s strong wool clip.

The Wool Partners Co-operative float was launched in late October and has been twice extended, the latest on December 17. According to media reports a further announcement on its future is expected tomorrow or early in the New Year.

Horizon’s survey shows wool growers are keeping their chequebooks firmly closed because they did not feel well informed by WPC’s prospectus, a large debt WPC will inherit from Wool Partners International, and concerns about the directors and management.

While 20.2 percent said they had bought shares, 70.5 percent said they had not bought shares and had no intention of doing so.

This indicates the float could fall well short of its stated minimum required subscription of $65 million dollars from farmers producing 50 per cent or more of the country’s strong wool clip.

Most people who read the prospectus did not seek further expert opinion (77.9 per cent) which could indicate they did not intend making the investment and 60.4 per cent of strong wool growers said there was not enough information and they would like to have seen more detail.

Only 16.8% percent of all strong wool growers thought the float would be successful.

The qualitative section of the Horizon survey was very damning for the directors and management and highly critical of the prospectus for its lack of detail.

One of the biggest concerns listed was the large amount of debt, including a $24 million bank loan that WPC will inherit from Wool Partners International, which is chaired by former Telecom boss Theresa Gattung.

Ms Gattung has been fronting public road shows and telephone conference calls to drum up strong wool grower support for WPC. 

Executive manager for the wool exporters, Mr Nick Nicholson said the WPC promoter’s own research, released earlier in December,  was from a limited sample of 300 with a large proportion their own clients. In spite of this it would now be quite clear to everybody that the only responsible course of action was to pull the pin on the float.

“The costs for a public issue are continuing to mount and it would be quite irresponsible if the promoters decided to re-issue the prospectus and keep going. Fortunately these float costs are not being borne by the wool growers but by Wool Partners International.”

Mr Nicholson said the failure of the float was not the end of the road for strong wool growers. The was long term unity in the New Zealand industry that was now extending internationally and the Horizon research showed wool growers wanted all sectors to work co-operatively.

“We are taking this on board and looking at ways to launch a service direct to farmers that will give them feedback on where their wool is going, what products it is being made into and how they can achieve premiums for their clip.”

The Prince Charles inspired Campaign For Wool and global promotion through the IWTO that links New Zealand strong wool with co-ordinated promotions in association with other wool growing countries, were exporter-led initiatives that had been shunned by Wool Partners International.

“It is paramount strong wool growers are looked after. When the growers are thriving, the rest of the industry is also doing well and that’s something we all want to achieve,” Mr Nicholson said.

Ends

Horizon Research Limited survey covered 618 farming industry respondents. Of these 205 were strong wool growers. Other respondents included people managing farms, producing strong wool, or people servicing the wool and strong wool industry.

For information about the methodology and independence of the research please contact Grant McInman, Manager, Horizon Research Tel 021 076 2040.

For further comment about the research results contact Nick Nicholson Tel 021 430 586, office 03 377 0872, home 03 353 1049.

Released by Iain Morrison of Wellington Public Relations and Communications company Morrison McDougall Tel 021 688 668.