Elders Primary Wool, Primary Wool buy Christchurch Yarns NZ   23 Oct 2014

Elders Primary Wool, Primary Wool buy Christchurch Yarns NZ out of receivership

By Suze Metherell

Oct. 23 (BusinessDesk) - NZ Yarn, a joint venture between Elders Primary Wool and Primary Wool Cooperative, have bought Christchurch Yarns NZ out of receivership for an undisclosed amount.

The Christchurch-based wool spinning company was tipped into receivership in April, owing $7.2 million to general security agreement creditors including Westpac Banking Corp, while preferential creditors were owed $1.2 million, according to the first receivers report on June 11.

The plant was damaged in the 2010 and 2011 Canterbury earthquakes and had failed to regain customers lost during the business disruption, while a sharp appreciation in the New Zealand dollar had further weighed on its export business, which made up 98 percent of its revenue.

"The sale has been confirmed," receiver Andrew Oorschot of Ashton Wheelans said in a statement. "The business will continue to operate as a going concern, providing ongoing employment opportunities for those working at Christchurch Yarns and ongoing supply for its loyal customer base.”

The news comes after Cavalier Wool Holdings and New Zealand Wool Services International announced yesterday they will merge their two wool scouring operations. The merger, pending Commerce Commission approval, will create a wool scouring monopoly and is a bid to insulate the sector from the threat of offshore scourers, particularly those in China.

“It was imperative that the business remained an independent, fully operational New Zealand yarn spinner," said Elders Primary Wool chairman, Stu Chapman. "The onshore and offshore commercial opportunities this acquisition brings are substantial for EPW, the Just Shorn programme and the New Zealand wool industry.”

Earlier this year, South Island investor Carr Group has bought Elders Rural Services New Zealand, for an undisclosed amount from ASX-listed Elders Australia and New Zealand-based Sredle Rural Services.

The Ashburton-based investor is expanding its Winslow agribusiness, which is a conglomerate of rural-focused businesses including farming and dairy machinery services, grain, feed and seed companies as well as owning The Honey Company. Elders Rural Services has livestock and wool agents across the country, farm supplies and rural insurance offerings.

Elders Primary Wool is a wool broker, and is 50 percent owned by Winslow, with the reaming controlled by the farmer-owned Primary Wool Cooperative.

The Christchurch Yarn deal will be settled Nov. 21, and NZ Yarn will continue to seek grower investment up until Nov. 19, it said.

New Zealand is the world’s third largest wool exporter, supplying 45 percent of the world’s carpet wool.

(BusinessDesk)

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