Wool Co has failed to raise enough capital in its attempt to acquire New Zealand Wool Services International.
Wool Co, a joint venture between Wool Equities Ltd and Christchurch-based investment bank Ocean Partners, was seeking to raise $40 million. In October, it reduced the minimum investment in its offer from $23,750 to $9500.
The company would return money subscribed by investors who supported the capital-raising initiative, chairman Cliff Heath said in a statement.
"Wool Co received considerable support from wool growers for its initiative to effect a much-needed consolidation of the wool industry. Unfortunately, this strong verbal support did not translate to adequate financial support," Mr Heath said.
The company accepted the capital-raising period was an extremely busy time on the farm with lambing and docking for many wool growers. However, the proposed sale of the scours to Cavalier Holdings (CWH) was a "defining moment" in the future of the New Zealand wool industry.
Time had been "of the essence" and, if Wool Co was to be successful and in a position to act on behalf of farmers, it was necessary to undertake the capital raising through that period, Mr Heath said.
Many farmers believed a monopoly was inevitable when the High Court in late November validated the Commerce Commission's decision to allow CWH to create a scouring monopoly, and that "negatively impacted upon the momentum of the capital raise".
"Wool growers were given the opportunity to stop this monopoly, support industry consolidation and look to protect their future wool incomes. Unfortunately, farmers have chosen not to support this initiative in sufficient number," he said.
WSI is also planning a capital raising in the near future in its attempt to buy the 64% of the company that is owned by Plum Duff and Woolpak Holdings and is under the control of a receiver.
