8 Aug 2011

WEL now in stronger position

1:02 pm on 8 August 2011

Wool Equities Ltd says the final distribution of former Wool Board money to sheep farmers puts it in a stronger position to negotiate deals that would give farmers more control in the wool industry.

The Wool Board Disestablishment Company had been sitting on almost $7 million remaining from board reserve funds, while it waited on the outcome of a long-running legal action brought by the Saxmere Group of specialist wool growers.

With that case finally closed, DISCO has distributed the remaining money to about 1300 sheep farmers.

Wool Equities received $2.75 million of that, as most of its shareholders opted to convert their cash payouts to shares in WEL.

Wool Equities also inherited a $3v million Wool Board tax credit.

Chairman Cliff Heath says this gives WEL more certainty as it considers whether to put in a bid for the wool trader and scour operator, Wool Services International.

He says Wool Equities expects to put a proposal to farmers by the end of the month seeking to raise capital to bid for WSI.

He says merging Wool Services and WEL into a new farmer-controlled company would be the best outcome.

But it would have to compete with other bids for Wool Services International, including one from Cavalier Wool Holdings, which is currently held up by an appeal due to be heard in the High Court later this month.