Wool Partners Co-operative expects to be profitable after its first year of trading, according to forecasts released in its revised prospectus.
In response to criticism from potential farmer-investors, the co-operative has released more financial detail, including forecasts that predict a significant turnaround from a deficit in the period to June 30 this year to a healthy profit in the year to June 30, 2012.
The accounts also question claims made by critics of the fledgling co-operative, including that it will inherit a $24 million debt from subsidiary wool exporter Bloch and Behrens.
Wool Partners Co-operative (WPC) is seeking strong-wool-growing farmers to subscribe for $1 shares for every kilogram of wool they produce, up to $65 million, to launch the company, which will create an integrated supply chain with the goal of lifting wool returns to farmers.
For the period to June 30 this year, WPC forecasts earnings before interest, tax, depreciation and amortisation (ebitda) of a deficit of $1.4 million and an operating deficit of $1.5 million.
The loss before tax is expected to be $1.9 million.
For the year to June 30, 2012, it forecasts ebitda of positive $4.2 million, operating profit of $4 million and before-tax profit of $2 million.
The company also expects to be cash flow positive, $2.2 million for the interim period and $8.7 million for the full year.
The Council of Wool Exporters has highlighted the performance of Wool Partners International (WPI), which, if WPC proceeds, will form the heart of the new company, saying it has built up "losses" of $5.8 million.
The financial information does not provide that detail, but shows WPI, including Bloch and Behrens and Wools of New Zealand (WNZ), lost $315,000 in the year to June 30, 2010, but had positive ebitda of $1.373 million.
Net interest and finance costs were $1.2 million.
Both Bloch and Behrens and Wools of New Zealand had positive ebitda of $893,000 and $105,000 respectively.
Bloch and Behrens recorded a $393,000 loss and WNZ a $24,000 profit.
WPC said there were significant differences from WPI: WPC would not be acquiring the New Zealand Wool Handlers business, which would stay with WPI; it would have a known, contracted supply of wool from growers; its governance and corporate costs would be lower; and it planned to outsource information technology and human resources services.
The Council of Wool Exporters has made much of a "$24 million bank loan debt that would be inherited from Bloch and Behrens by the new co-operative".
Notes attached to the financials state that as at March 31, 2010, Bloch and Behrens had a trade finance facility, estimated to be drawn down to $11.5 million, and working capital facility, estimated to be drawn down to $9 million.
WPC has previously stated it will assume a $737,000 debt to the Wool Research Organisation of New Zealand Trust.
WPC's forecast accounts do not include any non-current liabilities such as long-term debt, but provide for trade finance of $11.5 million and working capital of $9 million.
The three extensions of the offer have been costly, with advisory, legal and accountancy costs grown from $980,000 in the initial prospectus to $1.355 million in the latest document.