Cavalier ‘Vision’ Mischievous, Misleading And INAPPROPRIATE

New Zealand Wool Services International

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Cavalier ‘Vision’ Mischievous, Misleading And INAPPROPRIATE

New Zealand Wool Services International (WSI), today condemned a statement by Cavalier Wool Holdings (CWH) promoting the notion that a so-called merger of its business with that of WSI would be the saviour of the New Zealand strong wool industry, calling it both mischievous and misleading.

WSI Chief Executive Michael Dwyer said that CWH was in fact seeking to create a monopoly.
“It is well known that CWH has applied to the Commerce Commission seeking authorisation to acquire the Plumduff and Woolpak holdings in WSI in order to create a monopoly over wool scouring in New Zealand.
“This is somewhat different from a merger, and it is clear that getting such authorisation is likely to be extremely difficult. An important consideration will be whether this is in the best interests of all wool growers and those who depend on a quality delivery of New Zealand wool for their own businesses.
“It is also curious, to say the least, for CWH to suggest that the wool industry, which is in excellent shape and enjoying sustained high prices, is in decline and is somehow in need of CWH’s plan to close down New Zealand’s largest exporting business and create a monopoly over wool scouring.

“At a time when the outlook for New Zealand strong wool is very bright and the WSI assets in question are part of a highly successful, vertically-integrated, New Zealand-owned merchant scour, the proposal to close down and use the plants from this business raises a number of questions.”

Mr Dwyer questioned whether the proposal was in the best interests of farmers, pointing out that feedback from farmers was overwhelmingly in favour of competition in the scouring and marketing of wool, and that WSI delivers results in both for them.

“Without an independent WSI, wool growers cannot be certain they are receiving the best scouring charges and delivering the highest quality of scoured wool to overseas buyers”, Mr Dwyer said.

He said staff and board members had received many phone calls from growers and manufacturers who see the prospect of a wool scourer monopoly as a serious threat to their future.

“They’ve also expressed concerns around price gouging, wool export industry ownership, and wool scouring quality – there is genuine fear in the industry”, Mr Dwyer said.

Mr Dwyer said that CWH’s continuing reference to China and its scouring capacity was misleading and overstated.

“The truth is that most Chinese scouring equipment is old and suited for scouring finer wools such as merino, rather than strong crossbred wools. China has greatly increased the amount of scoured wool imported from New Zealand this season and this is largely because of WSI’s marketing efforts.

“The problem for Cavalier is that they are a commission scourer, who may be operating well below their capacity. Their clients, who are other (mostly overseas-owned) exporters, have been exporting greasy wool which does nothing to help Cavalier”, said Mr Dwyer

He said there had been a high level of interest in the WSI shares and that the sale would be a very open process and was likely to be highly competitive.
“The receivers and the Board of WSI are very pleased with the high level of interest in the business which has no doubt been strengthened by our record recent after-tax profit of $3.058m for the first six months of the current year, and the special dividend to follow shortly.
Mr Dwyer said it was also very inappropriate for CWH’s Colin McKenzie, a member of the Wool Industry Taskforce, to state that CWH would be paving the way for the Superstores initiative highlighted in the Minister of Agriculture and Forestry's recently published Wool Industry Taskforce report.

“It is mischievous of CWH to claim some kind of official blessing for its plan which is certainly far from the case. Such opportunism paints CWH in a poor light, in our view,” said Mr Dwyer.

ends

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