Cooperative launched to unite strong wool industry

Co-operative launched to unite the strong wool industry

Growers of New Zealand strong wool are being invited to invest in a grower-owned co-operative to drive the effort to realise the true value of their product.

Wool Partners Co-operative Limited is seeking to raise a minimum of $65 million from growers to build on the success already achieved by Wool Partners International Limited (WPI) in repositioning New Zealand strong wool as a sustainable luxury fibre. The company will be 100 per cent owned and controlled by growers.

Wool Partners Co-operative chairman Jeff Grant says the launch provides a much-needed opportunity for growers to take control of their industry and work together to improve returns. “Progress made through WPI over the past couple of years has provided an excellent platform, with an integrated value chain and a strong branding and marketing structure. We are now ready to take the next step.”

Mr Grant says, “Producer-owned co-operatives have proven their ability to deliver sustainable returns for their shareholders. Until now, the strong wool industry has been fragmented, and as a result it has not been able to stop the long-term decline in prices now threatening its viability.

“We can now choose to work together to put those days behind us. Wool Partners Co-operative is confident there is a future for the superior qualities of New Zealand strong wool, as a premium ingredient in furnishings and carpets for discerning consumers who appreciate the qualities of natural materials produced in a sustainable manner.

“WPI has already demonstrated that premiums can be created that recognise the quality and performance characteristics of New Zealand strong wool. Over the past few months, approximately 30 new partners (manufacturers, spinners and retail groups) have signed with us to use Wools of New Zealand and LaneveTM branded fibre in their carpets and other interior furnishings.

“That was about building demand and ultimately the value of wool. We have recently entered a new phase, finalising agreements that will deliver premium returns as well as additional volume. The first of these, with Europe’s largest carpet distributor Headlam Group, was announced a fortnight ago. Others will be announced in the next few weeks.

“Then last week we announced our involvement in a multi-party arrangement with the Starbucks group to deliver a revolutionary new fabric made from 70 percent LaneveTM wool and 30 percent recycled jute. This is a classic example of value being created through innovation and by working with industry partners. In a co-operative, that value will be generated for the benefit of growers.”

Launching the investment statement and prospectus for the capital raising today, Mr Grant says Wool Partners Co-operative is seeking growers willing to commit their clip and capital. The prospectus is seeking commitment on the basis of one $1 share for every kilo of greasy strong wool produced. Payment will be 20 cents per kilo upon subscription and four further annual calls of 20 cents per kilo each, beginning May 2011. Payments other than the initial 20 cents per kilo subscription can be made by deduction from wool cheques rather than in cash.

Proceeds of the capital raising will be used to purchase selected assets from WPI, including leading international brands, the Wools of New Zealand business, the National Wool Auction Centre, WPI’s procurement network and certain logistics assets.

New Zealand Wool Handlers, the operator of logistics and warehousing services, is not included in the purchase, but Wool Partners Co-operative has the opportunity to acquire the business for 18 months. Wool Partners Co-operative will also sign an exclusive contract with New Zealand Wool Handlers to provide logistics and warehousing services.

Wool Partners Co-operative has an inaugural board of directors comprising Jeff Grant (Chairman), Theresa Gattung, Sir Brian Lochore, John Perriam, Mark Shadbolt and Keith Sutton.

“The directors have an extensive range of wool industry, commercial and marketing expertise that will assist management in achieving a sound future for the industry,” Mr Grant says.

Growers will receive in the mail a copy of the prospectus and investment statement detailing the offer. Electronic versions can be downloaded now at www.woolpartners.com

The directors and management of Wool Partners Co-operative will embark on an extensive programme of farmer meetings, beginning on 26 October 2010, to provide all growers with the opportunity to discuss the vision for Wool Partners Co-operative and the capital raising programme. The meetings will end in the last week of November, a few days before the 30 November 2010 closing date for subscriptions.

“The offer will proceed only if there is majority support from growers who collectively produce more than 50 per cent of the strong wool clip,” Mr Grant says.
“Consolidation is essential if we want to change the way strong wool is marketed and sold. It is the goal of Wool Partners Co-operative to market 60 per cent or more of the strong wool clip and drive the partnerships that will bring about change. We recognise that Wool Partners Co-operative does not need to own the entire value chain, but it does need to build strong relationships with partners and customers who share a common vision and goal.”

“The future of the strong wool industry is now in the hands of the growers. By committing their wool to Wool Partners Co-operative and making a modest investment in the company, growers will take control of the industry and drive a marketing organisation that is innovative and passionate about strong wool.”

ENDS

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