NZWSI Prepares To Raise Capital

NZWSI Prepares To Raise Capital

In response to concerns expressed by shareholders and other wool industry participants, New Zealand Wool Services International (NZWSI) Chairman Derek Kirke today confirmed that the company is preparing for its own capital raise, but this will not be finalised until the requirements and timing are right, and said that to do so before a number of issues become clear would be irresponsible.

Mr Kirke said the NZWSI Board has been most reluctant to debate publicly the merits of the WEL/Woolco capital raise preferring to leave NZWSI shareholders and wool growers to make their own carefully considered decisions. He also noted that NZWSI had received a large number of enquiries from the company's shareholders who are concerned and confused because of the NZWSI Board's silence on the matter, and asking the Board to clarify the situation from a NZWSI perspective.

With our recent excellent financial results, and attractive dividend yield, many of our shareholders, wool growers, and a number of large farm related corporates, have indicated that they would like the opportunity to invest directly in a NZWSI capital raise, Mr Kirke said.

"NZWSI has the correct vertically integrated grower-scour-exporter business model which is serving farmers and NZWSI shareholders very well. However, we have a responsibility to our shareholders and to the wider industry to wait for a High Court decision on the appeal against the Cavalier authorisation from the Commerce Commission. There is no point in initiating a capital raise until there is certainty on many questions which are currently unanswered."

"A decision on Cavalier's attempt to gain a monopoly over the wool scouring industry is currently subject to the appeal before the High Court and the outcome of this is crucial to future action."

"The Board and Management of NZWSI have put considerable work into preparing for a capital raise to deal with the shares currently in the hands of the South Canterbury Finance receivers."

"It would be irresponsible to embark on a capital raise or any other action that would involve significant financial and operational resources until the question of the legality of Cavalier's monopoly attempt is resolved."

"Judging from enquiries to date, it is clear that a timely and properly planned NZWSI capital raise will enjoy strong shareholder, wool grower, and industry support, and the company is ready to launch this when the time is right."

Mr Kirke said he can understand the confusion and frustration from shareholders and the wool industry and urges NZWSI shareholders and wool growers to keep their capital available until the situation around the shares of NZWSI which are in the receiver's hands is resolved.

When the time is right the NZWSI Board will ensure that there will be an opportunity to directly invest in NZWSI shares Mr Kirke said.

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