A prospectus for Wool Partners Co-operative was released yesterday and chairman Jeff Grant said the company would only proceed if growers committed half the country's strong-wool clip by subscribing for 65 million $1 shares calculated on each kg of greasy wool they produced.
If that threshold was not reached by the November 30 deadline, Wool Partners Co-op (WPC) would not proceed, Mr Grant said.
Farmers can pay for the shares in five 20c instalments and, in doing so, will commit all their wool production to the co-operative. All but the first 20c can be paid by deductions from wool cheques and there will be an ongoing 2% wool market development fee.
After two instalments have been paid, Mr Grant said $17.7 million would be used to buy the exporter Bloch and Behrens, wool brands, procurement network and the technical support and marketing entity Wools of New Zealand from Wool Partners International (WPI).
The grower-owned holding company and WPI shareholder Wool Grower Holdings will be disbanded. When asked about settling a $10 million loan it has with PGG Wrightson, Mr Grant said that was up to the two respective boards.
Mr Grant said WPC directors had identified four guiding principles to improve the fortunes of the strong-wool sector: the need to unify the clip, grow the market share of strong wool from 50% to 60%, collaborate with the wool industry and be innovative in the way wool was marketed.
Surveys of growers gave Mr Grant confidence that the threshold would be reached. He said growers realised that degree of influence was needed to change the industry model.
WPC director and Banks Peninsula farmer Mark Shadbolt said the required shareholding was equivalent to between $15,000 and $20,000 per farm payable over five years, insignificant when compared to dairy farmers.
"This is the most exciting opportunity I've ever had and its a very soft investment.
"I'll be very disappointed if we don't get it and if we don't, we will be letting ourselves and our neighbours down and sending the signal that we are happy to slowly go broke."
Fellow director Theresa Gattung was also confident the threshold would be reached, saying 75% of suppliers to WPI were paying a marketing levy, a sign that they realised the importance of marketing wool.
WPC directors propose returning 80% of profits to shareholders through rebates and dividends, and shareholders will have one vote per share, up to a shareholding cap of 5%.
In addition to the 65 million kg of raw strong wool, meat companies will also be able to subscribe based on slipe wool production.
Alliance Group and Silver Fern Farms have both said they could support the new entity.
