Wednesday, July 6, 2022

Australian wool to be scoured in NZ?

Lempriere would like to send Australian wool to New Zealand for scouring when it completes the takeover of Wool Services International (WSI) but says the plan is a “long shot’’.

“The potential is there and we’ve talked about it but we think there are some obstacles with import issues,’’ Lempriere spokesman Tony McKenna said after WSI’s annual meeting in Christchurch on Tuesday. “We’d like to do it if we could.’’

Melbourne-based Lempriere is offering 45c a share for the Christchurch-based wool merchant and scourer and at the time of the meeting had acceptance for 79.15% of the shares. The offer is still conditional and not due for completion till late February.

The group would want to get as much wool volume through the WSI scours – Kaputone near Christchurch and the plant at Napier – to maximise income from the wool grease manufactured as a scour by-product. Wool grease values are at record highs and were a fundamental part of the value of the business, McKenna said.

McKenna, managing director of Ceres Capital Management in Australia, represented Lempriere chairman William Lempriere at the meeting. Lempriere does not have any scour assets in Australia but does own a scouring plant in India.

It was committed to retaining the WSI operating model as a merchant scourer, McKenna said. “It is working well and there is a good management team. It’s a good fit for our existing business.’’

Lempriere’s plan was to support the team rather than taking over from it. His team had spent time with WSI management discussing future arrangements before confirming the takeover bid.

Historically a Merino wool business, Lempriere operates round the world but NZ is one major wool area where it has been under-represented, McKenna said. It sources wool through Guy Spooner’s business here and also owns Levana Textiles in Levin.

Levana and WSI would work closely together on industry innovation and there was some work Levana was doing which might sit better with WSI.

The WSI acquisition will cost about $31 million. This was a significant investment, and a step into working with cross-bred wool, McKenna said.

Developing a NZ business had been on the agenda for William Lempriere for a number of years.

WSI provided that opportunity. The group had some contact with WSI early in the process, but that went quiet when it looked as though Cavalier Wool Holdings would be the buyer.

“We did not want to be in a bidding war but when it became clear that Cavalier was not a walk-up buyer  we came back.’’

The conditions on the takeover offer include having independent verification that the upgraded operations and effluent discharge system at Kaputone, developed in August and September, are working at set performance levels.

The feedback on this work was encouraging, McKenna said.

Managing director Michael Dwyer earlier told shareholders that the Kaputone upgrade provided it with the world’s most advanced, eco-friendly system to dispose of wool scour effluent.

The company’s wool scours were benefiting from the high prices for wool grease, which had offset the large increases in raw material and energy costs, and enabled WSI to remain internationally competitive, he said.

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