Wool Partners International Limited Questions and Answers

1.	Some newspaper articles say Wool Grower Holdings Limited owns 60% of Wool Partners International, and PGG Wrightson owns the balance. Is this right?
	No. WGH owns 60 voting shares, and PGG Wrightson holds 40 – but there are another 37,500,000 issued shares. Of these, PGG Wrightson holds 27,500,000 and WGH holds only 10,000,000. Overall, PGG Wrightson holds 73.3% of the shares in WPI, and WGH holds 26.7%.

2.	If WGH holds 60 of the 100 voting shares, does that mean it controls WPI?
	Not necessarily. While it is correct to say that WGH owns 60% of the voting rights, there is a shareholders’ agreement between it and PGG Wrightson that could contain provisions relating to control of WPI. The terms of the shareholders’ agreement are not public, but many expect that due to the level of its investment in WPI, PGG Wrightson will have ensured that it has more say than a “normal” minority shareholder.

3.	Can a dividend be paid out to the holders of the voting shares?
	No. The voting shares do not earn dividends.

4.	Why has WPI issued so many shares?
	WPI acquired PGG Wrightson’s wool business for $37.5 million. So, it needed to raise $37.5 million to pay for it. PGG Wrightson provided $27.5 million (and received 17.5 million Preference Shares and 10 million Industry Shares) and WGH provided $10 million (and received 10 million Grower Shares).

5.	Where did WGH get $10 million to buy shares in WPI?
	From PGG Wrightson. And PGG Wrightson has taken a security interest in WGH’s 10,000,000 Grower Shares in WPI – which means if WGH cannot repay the $10 million to PGG Wrightson, then PGG Wrightson can potentially become the owner of the Grower Shares (and would then hold 37,500,040 shares, with WGH holding 60 shares).

6.	So, where will WGH get $10 million to repay the loan from PGG Wrightson?
	Apparently from growers. It is proposed that WGH will issue a prospectus early in 2009 inviting growers to buy shares – and the first $10 million raised will be used to repay PGG Wrightson’s loan. Once that loan is repaid, PGG Wrightson will cease to have a security interest in WGH’s Grower Shares.

7.	Does that mean WGH will only be seeking to raise $10 million from growers?
	No. It is anticipated that WGH will want to raise an additional $17.5 million from growers, which it will use to take up more Grower Shares in WPI. This is because as new Grower Shares are issued, PGG Wrightson’s Preference Shares convert into Industry Shares.

8.	Why does it matter whether PGG Wrightson holds Preference Shares or Industry Shares?
	It matters because PGG Wrightson’s Preference Shares have a preferential right to dividends – a return is paid on those shares before anything is paid out on the Industry Shares or Grower Shares. But Industry Shares and Grower Shares essentially have the same earning potential – so it is in WGH’s interest to have PGG Wrightson’s Preference Shares converted into Industry Shares as soon as possible.

9.	Who decided that WPI should pay $37.5 million for PGG Wrightson’s wool business?
	It seems that the price was agreed by WPI, WGH and PGG Wrightson. It is expected that the WPI and WGH Boards would have obtained independent valuations of the business before agreeing to the price.

10.	What information is currently available to growers about the request to be made of them to acquire shares in WGH?
	None. It is proposed that WGH will issue a prospectus in early 2009. Until a prospectus has been issued, no-one is allowed to make offers to growers to acquire shares in WGH.