Cavalier’s Attempt at a Monopoly Described as Frivololus

Cavalier’s Attempt at a Monopoly Described as Frivololus

New Zealand Wool Services International Limited (WSI) Chairman Derek Kirke reported today that the Company had been approached by Cavalier Wool Holdings Limited Director Wayne Chung, seeking the support of the WSI Board for their application to the Commerce Commission to buy its scouring assets and informing WSI that the application would be publicly notified in the near future.

Cavalier owns the only other wool scouring plants operating in the NZ market place.

Mr Kirke said that the Board of WSI made it clear to Cavalier that the company’s wool scouring assets are not for sale and that it is important to those needing scouring that at least two companies can offer these services to ensure the continuity of a strong competitive market.

“We believe that any attempt to create a monopoly in wool scouring would not be in the best interest of the New Zealand economy or its wool growers. We expect that there will be a number of submissions opposing this application and that its chance of success is not assured.

“We believe this is a frivolous application mostly designed to destabilise and unsettle a very successful competitor,” Mr Kirke said.

There is considerable interest in the company at this time centred on the 65% of shares about to be offered by the receivers of Plum Duff Limited and Woolpak Holdings Limited.

Mr Kirke said the Board looked forward to working with the receivers of Plum Duff and Woolpak over the next few months to achieve an ownership structure which not only benefits all shareholders but gives long term security to our (80) loyal staff, together with our valued wool grower suppliers, and clients.

“Our extensive international customer base is very reliant on the premium product WSI’s scours deliver, and accordingly, are also intently interested in the outcome,” Mr Kirke said.

WSI had participated in a rationalisation of the scouring industry recently which had seen the number of scours reduce from seven to four. WSI‘s scours are currently operating at the limit of their capacities.
WSI Managing Director Michael Dwyer did not believe that any move by a competitor to further rationalise or monopolise the industry for their own benefit would be met by support from the wool industry at large.

“The very strong lift in wool prices achieved over recent months has restored confidence in the industry, and any perceived threat to competition within the scouring industry could trigger a loss of confidence in New Zealand’s ability to deliver on its promises to world markets,” Mr Dwyer said.

WSI’s recently released half year result, and the special dividend paid to shareholders, show that the company is in a very strong position.

ENDS

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