Cavalier Wool Holdings Welcomes Appeal Decision

23 November 2011

Cavalier Welcomes Appeal Decision

Cavalier Wool Holdings Ltd (CWH) has welcomed the decision from the High Court today dismissing the appeal by Godfrey Hirst against the Determination of the New Zealand Commerce Commission authorizing CWH to purchase the wool scouring assets of New Zealand Wool Services Ltd (NZWSI).

“This decision paves the way for CWH to negotiate the sale and purchase of the assets of the NZWSI business with confidence,” said Nigel Hales, CEO Cavalier Wool Holdings.

“Cavalier Wool Holdings will now continue to seek to reach an agreement with NZWSI for an agreement that is mutually positive, and a good outcome for all stakeholders including NZWSI, its staff and shareholders.”

Hales said CWH believes the merger of the wool scouring businesses is a positive step forward and is part of the structural changes that the industry requires to gain efficiencies, continuous improvement and remain competitive with our international competitors.

“We are heartened by the level of support received from many within the industry who recognize the merger of CWH and the NZWSI scouring operations would deliver real benefits for the entire New Zealand wool industry.

“CWH has been in discussions with NZWSI and consulting with wool growers and the industry on this consolidation proposal for nearly two years

“As we have already stated, CWH will maintain scouring capacity, and continue to support a viable wool industry -- it is in all of our interests to see strong wool prices for farmers.

“We have already undertaken seven successful scour mergers with the aim of making structural improvements in the wool sector. This merger will further strengthen the case for retaining a scouring industry in New Zealand. Greater scale means we can process more efficiently -- at lower cost to farmers - and this is crucial to the survival of the New Zealand scouring industry as exporters have the option to bypass the New Zealand industry and export greasy wool to China.

“If successful CWH will continue to operate as a commission wool scourer post- merger, but plans to sell the wool trading division of NZWSI as a going concern. We will also continue to promote the concept of a coordinated ‘Super Store’ logistics business which through reducing transportation and storage costs will mean higher returns for wool growers.”

Hales said it was important growers understood that CWH is a separate company to Bremworth or Cavalier Corporation. We are different organizations with different shareholders and Boards of Directors.

“CWH looks forward to working with all participants for greater industry good. It is our aim to ensure New Zealand continues to be a world leader in the growth, production and sale of high quality wool. The merger of CWH and the NZWSI scouring operations will continue to support and enhance the New Zealand wool industry,” says Mr. Hales.

ENDS

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