Wool share applications appear to match HorizonPoll findings

The number of shares in a new co-operative being applied for by strong wool growers appears to be matching Horizon Research findings.

The Wool Partners Co-operative has announced it has raised $35 million - just more than half its $65 million target. It says this is despite efforts by the Wool Exporters Council to undermine the formation of the co-op.

The exporters' council commissioned research by Horizon in December to evaluate the wool industry's and strong wool growers' views on the float and the future of the industry.

The results indicated the float might be sinking.

The Wool Exporters' Council has responded today to Wool Partners Co-operative criicism of it, releasing a statement saying:

Wool Partners Co-operative claims that it has $35 million investment support, which verifies the independent research findings that this float will fail, in spite of the optimism of its chairman Jeff Grant.

The $35 million commitment represents only 27 percent of the strong wool clip, which matches closely the results from the independent Horizon research, which was commissioned by the Wool Exporters Council.

The research found that 70 percent of woolgrowers have not and do not intend to invest in the $65 million capital raising.

The wool exporters’ executive manager, Nick Nicholson said gaining a commitment for only $35 million and indicating that a lower level of subscription of $55 million, must seriously question the on-going viability of Wool Partners Co-operative.

“The prospectus makes a big point that 50 percent of the clip and $65 million was a minimum for Wool Partners Co-operative to proceed,” Mr Nicholson said. “It’s the basis of their financial forecasts, so if they are going to accept a lower level of subscription, how are they going to finance their business.

“This means they will have no mandate and no majority of strong wool growers backing them. If I was an investor it would scare the life out of me and I would be asking for my cheque back right now.”

Mr Nicholson said the survey by Horizon Research conducted between December 22 and December 30 involved more than 600 respondents, and had been shown to be remarkably robust and accurate.

“Jeff Grant says they have $35 million, which is about 27 percent of the strong wool clip. Take away Landcorp and a few of the other big incorporations and it puts their commitment down at around 20 to 22 percent.

“Back in October Wool Partners International claimed to handle 40 percent of the strong wool clip, which seems to indicate even their own clients are deserting them at a time when they needed to pick up new business and not lose it.”

Mr Nicholson took exception to the comments from Mr Grant that the exporters and private merchants had “under-mined” the capital raising and had been “lobbying” wool growers.

“We have only dealt in facts and asked a few hard questions. Clearly they don’t like the scrutiny. The Horizon research said growers were:

• concerned at the lack of information in the prospectus such as a balance sheet
• worried about $24 million of bank debt
• wanted details of how the businesses being acquired have performed in recent times
• keen to know how assets being acquired from Wool Partners International have been valued.

Another area of concern from the qualitative part of the Horizon poll was the commonality of the management and directors between Wool Partners International, who are selling the assets and Wool Partners Co-operative, who are buying them.

Mr Nicholson said the extensions to the float must have blown the Wool Partners Co-operative float budgets to smithereens, meaning they are going to need more than they originally projected, not less as they now seem to propose.