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Wool Equities announces sale of investments to AgResearch
23
Jul '08
Wool Equities Limited has entered into a Share Transfer Agreement with AgResearch Limited for the sale of its:
• 74.9% shareholding in Covita Limited - AgResearch already owns the remaining 25.1% shareholding; and
• 33.3% shareholding in Paraco Limited - AgResearch already owns 33.3% of the shares in Paraco, with the remaining 33.3% held by Meat & Wool New Zealand subsidiary Agritech Investments Limited.

The consideration for the sale of these shareholdings is $350,000. Completion under the Share Transfer Agreement is expected to occur by 4 August 2008.

Covita owns all of the shares in Orico Limited. Orico was formed on 1 July 2006 as a result of the restructuring of Ovita Limited and specialises in muscle growth and development research.

Orico also holds the licence to commercialise Paraco's parasite technology.

Wool Equities Chairman, Dr Andy Pearce, said "Wool Equities is very satisfied with this outcome.

AgResearch has consistently proven its world-leading expertise in both myostatin research and animal health product development and is a natural home for the technologies where they can be developed to their full potential, while still capturing their value for New Zealand farmers."

The Share Transfer Agreement is conditional on a related series of transactions being entered into by Wool Equities, its subsidiary Keratec Limited, and AgResearch, including agreements for the sale of the Keratec plant to AgResearch for $950,000, the lease back of that plant to Keratec and licensing AgResearch to use Keratec's intellectual property for use in the waterproof, windproof and breathable fabrics field.

Dr Pearce explained that for some time Keratec's production plant has been operating at full capacity for one of Keratec's products.

The demand for this product is rapidly expected to exceed capacity and alternative outsourced manufacturing models are under consideration.

Dr Pearce said that the sale and lease back of the Keratec plant to AgResearch, in parallel with outsourcing of some manufacturing freed up the current plant to focus on higher value, specialised protein runs and research and development projects. An announcement on an outsourced manufacturer is expected be made shortly.

Dr Pearce also said that the transaction frees up capital and places Wool Equities in a stronger cash position to focus on the continued development of Keratec's technologies.

The agreement is also conditional on the passing by Wool Equities shareholders of an ordinary resolution approving the transactions or a waiver from New Zealand Exchange Limited being granted under the NZAX Listing Rules for the requirement to obtain shareholder approval on a technical matter.

Wool Equities Limited

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