26 May 2011

Cavalier would sell WSI wool trading division

2:02 pm on 26 May 2011

A company seeking to buy the country's biggest wool exporter and scourer, Wool Services International, has confirmed it would sell off the wool trading side of the business.

Cavalier Wool Holdings has made a conditional $40 million offer for all of Wool Service's assets and liabilities.

As well as its wool trading arm, WSI runs scours at Christchurch and in Hawke's Bay, which wash wool to remove the grease and impurities.

Cavalier wants to merge those with its own operation to create a wool scouring monopoly in New Zealand.

It already has preliminary approval from the Commerce Commission and is waiting for a final ruling, in the face of opposition from WSI and some others in the industry.

Cavalier Wool Holdings' chief executive, Nigel Hales, says it only wants the scours, but to do that it has to acquire all of Wool Services International, as the Takeovers Code prohibits "cherry-picking".

He says Cavalier would eventually sell the trading division as a going concern.

The Commerce Commission will give its final decision by 10 June.

Cavalier Wool Holdings also has to wait on the outcome of the bidding process for the sale of 64% Wool Services International shares held by two companies, Plum Duff and Woolpak Holdings, now in receivership.

The final bids for those shares were made to the receiver last Friday.

Wool Service International says with those complications, it's in no rush to evaluate the offer from Cavalier.

Meanwhile, Cavalier is pushing on with plans to further rationalise the wool supply and processing pipeline by creating super stores.

The company is promoting the concept of setting up large scale, independently operated wool stores in the North and South Islands, to channel the supply of wool going to the scours and to the ports for export.