New Zealand Wool Investment Company (Wool Co) has reduced the minimum investment in its offer to $9500 in its bid to raise $40 million to buy New Zealand Wool Services International (WSI).
The company had been "overwhelmed" by the support it had received from farmers but many were saying they would like to invest but the minimum required was too high, chairman Cliff Heath said in a statement.
"While many farmers meet the eligible persons criteria under the terms of the offer given, they have had a number of tough years on farm. They are telling us that they wish to err on the side of caution with respect to their off-farm investments.
"This is a farmer-led initiative and we need farmers to come in behind the opportunity financially, to ensure its success," Mr Heath said.
Wool Co is a joint venture between Wool Equities Ltd (WEL), which was established for strong wool growers out of the disestablishment of the New Zealand Wool Board in 2003 and now has more than 9500 farmer shareholders, and Christchurch-based boutique investment bank Ocean Partners.
The company is running a series of meetings over the next fortnight to outline its proposals to potential investors.
A 64% shareholding in WSI is under the control of the receiver of Hubbard-associated entities and that shareholding is on the market.
Following a successful fundraising, Wool Co would look to negotiate an agreement with the receiver under which the receiver would agree to accept a takeover offer for WSI made by Wool Co. It was intended such an agreement would then be followed by the takeover offer.
If the takeover offer was successful, it was then intended WEL would, once it had raised sufficient funding and obtained all required approvals, buy the shareholding in WSI acquired by Wool Co - resulting in a merger of the two publicly listed companies, Mr Heath said.
Last month, WSI chairman Derek Kirke said Wool Equities did not have any agreement with the receivers who controlled the 64% shareholding for the purchase of that "key stakeholding".
The rival bid for WSI followed the decision by the High Court to place a temporary halt on Cavalier Wool Holdings' proposed purchase of WSI to allow an appeal to be heard.
Carpet maker Cavalier has made 22 workers and some management redundancies across its Wiri, Napier and Wanganui mills.
Norman Ellison Carpets, 70% owned by Cavalier, is making 20 workers redundant at its Onehunga yarn mill next week. Both companies have announced they will be shutting down for a week around Labour Day.
A combination of a high wool price, lack of new housing starts and the lack of progress on the Canterbury rebuild had conspired to send the New Zealand yarn and carpet industry "down the same negative path as the wood processing industry", FIRST Union (formerly NDU) general secretary Robert Reid said.
Other yarn makers had also notified that orders were down and the union would "not be surprised" to see further job losses at other mills.
Carpet and yarn makers were quoting the increase in the price of wool from $3/kg to $7/kg as being the "killer" for the industry, Mr Reid said.
While the increase in wool prices might be good for farmers, it was making woollen carpets uncompetitive, he said.
