Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Wool Co-Operative Paints Red Ink Pictures in New Prospectus

Wool Co-Operative Paints Red Ink Pictures in Amended Prospectus

The new Wool Partners Co-operative prospectus is no more attractive than the original version, except that it declares losses in its first year, hints at possible losses in its second year and lists significantly increased costs for interests and float expenses.

“The big question on everyone’s lips is, will the woolgrowers who have subscribed to the first version of the prospectus, get the chance to ask for their cheques back because of the substantially changed offer in the new prospectus?” asked the executive manager for the Wool Exporters Council, Mr Nick Nicholson.

He said Wool Partners Co-operative is projecting a loss to 30 June 2011 of $1.774 million. The following year the prospectus says WPC will make a profit of $1.418 million, but this is based on supply of 65 million kgs of wool.

“They have now reserved the right to start with 55 million kgs of wool, and if they go ahead at this level, we estimate they will lose another $600,000 in the year to June 2012. The first prospectus said the co-operative needed 65 million kgs of wool to run the company’s operations and there have been suggestions this level would give the organisation a ‘mandate’.

“If they go ahead at the lower level we say they won’t have that mandate, and I’d be asking whether they can generate sufficient cash flow and profits to support the price paid for the business,” Mr Nicholson said.

The purchase price of the assets the co-operative is buying from Wool Partners International, of $17,067,000 is to be paid in two instalments. The first instalment of $8,533,500 is due to be paid on 15 June 2011, and $8,533,500 plus interest on 15 June 2012.

“Interest on the second instalment is at 9.75%, so now, WPC pays the purchase price plus another $832,000 in interest.”

Mr Nicholson said an independent poll by Horizon Research revealed almost 100 percent awareness of the Wool Partners Co-operative capital raising offer and this led to a very high readership of the prospectus (research indicated 8 out of 10 woolgrowers read the offer document).

“But 7 out of 10 farmers who read the prospectus were disappointed with the content and 70.5 percent of the woolgrowers who were polled said they had not and did not intend to invest in the Wool Partners Co-operative float.

“When you have a massive communications failure first time round, which leads to a fund raising shortfall of $30 million and still needing another 23 percent of strong woolgrowers, the job of selling the amended version gets a whole lot harder. You’d have to ask what magic marketing they can use to change growers’ minds?” Mr Nicholson said.

“In spite of this communications failure the float costs have gone from $980,000 to $1.355 million with the communications and marketing component rocketing by $155,000 from $190,000 in the first prospectus to $345,000 in the new prospectus

“This project is clearly a fizzer,” Mr Nicholson said.

While the chairman of the co-operative, Mr Jeff Grant had lashed out at him last week, Mr Nicholson said he would keep asking hard questions that he believed the woolgrowers would want to know.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Government: Delivering Lower Card Fees To Business

Commerce and Consumer Affairs Minister David Clark has today announced the Government’s next steps to reduce merchant service fees, that banks charge businesses when customers use a credit or debit card to pay, which is estimated to save New Zealand businesses ... More>>

SEEK NZ Employment Report: April 2021

OVERVIEW OF APRIL 2021: STATE OF THE NATION: April, for the second consecutive month, saw the highest number of jobs ever advertised on seek.co.nz. Applications per job ad fell 9% month-on-month (m/m). SEEK job ads were up by 12% m/m. SEEK job ads were ... More>>

Commerce Commission: Warns Genesis Over Business Billing Errors

The Commerce Commission has issued a warning to Genesis Energy Limited about billing errors concerning electricity line charges to business customers. Genesis reported the errors to the Commission. The Commission considers that Genesis is likely to ... More>>

Stats: Lower Job Security Linked To Lower Life Satisfaction

People who feel their employment is insecure are more likely than other employed people to rate their overall life satisfaction poorly, Stats NZ said today. New survey data from the March 2021 quarter shows that 26 percent of employed people who thought ... More>>

The Conversation: The Outlook For Coral Reefs Remains Grim Unless We Cut Emissions Fast — New Research

A study of 183 coral reefs worldwide quantified the impacts of ocean warming and acidification on reef growth rates. Even under the lowest emissions scenarios, the future of reefs is not bright. More>>

The Conversation: Why Now Would Be A Good Time For The Reserve Bank Of New Zealand To Publish Stress Test Results For Individual Banks

Set against the backdrop of an economy healing from 2020’s annus horribilis , this week’s Financial Stability Report (FSR) from the Reserve Bank (RBNZ) was cautiously reassuring: the country’s financial system is sound, though vulnerabilities remain. More>>