Wool growers asked to put money into another international marketing venture
Nov. 1 (BusinessDesk) - Strong wool growers are being asked for up to $10 million to step up the scope of international marketing firm Wools of New Zealand.
Wools of New Zealand has been funded by the wool market development fee since 2010 and wants to raise $10 million by issuing shares to wool growers at $1 apiece. The marketing company was spun out of PGG Wrightson into a grower's trust last year and is the latest attempt to build a central promotional body for the wool sector.
The Christchurch-based company needs to raise at least $5 million, and plans to use some of the funds to repay a $1.87 million loan owed to its shareholder, Wools of New Zealand Trust. The remaining funds will go to developing marketing and royalty earning programmes and to build supply chains.
Growers would have to participate in a programme to make an annual payment to a Wool Market Development Committee of 15 cents per kilogram of their strong wool production until 2018, when the company would be able to stand on its own.
"This is not a revolutionary model, nor is it an overnight solution to the issues that strong wool growers in New Zealand are facing," chairman Mark Shadbolt said in a statement. "Other primary sectors that have committed, invested in and connected with the market and developed new innovative products and processes, have been rewarded for doing so."
The offer is open until Dec. 14, and is open to individual or corporate strong wool growers at a ratio of one share for every two kgs of annual production.
The last attempt to build a marketing body fell over when Wool Partners Cooperative failed to raise the $55 million it needed to get off the ground.