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Disgruntled Wool Equities shareholders are seeking expert accounting advice over the sale of the company's textile research subsidiary Canesis for $1 million below book value this year.
Wool Equities - a listed biotechnology investor mostly owned by sheep farmers - revealed in its half-year results on Thursday that Canesis' sale price of $6.5 million was "about" $1 million below book value.
The sale to AgResearch gave Wool Equities - which had just under 75 per cent of Canesis - a total cash injection of about $5.8 million.
John Shirtcliff, a spokesman for the group of disaffected shareholders, pointed out this year that Canesis had been valued at $16.3 million gross in the 2005-06 annual accounts. He said then that he had sought NZX's view on whether this meant shareholder approval was required for the sale.
Shirtcliff said yesterday that, in the wake of the half-year results, he wanted more clarity over how the company had been valued previously.
"We had a real close look at things. One of the troubles - and this is why we've had to go for some wise help to understand the books - is that they're not reported consistently year-on-year."
However, a Business Herald reading of the 2005-06 accounts - confirmed by Wool Equities - showed Canesis' net shareholders funds were in fact $8.4 million.
Wool Equities chairman Andy Pearce said yesterday that Canesis' total value had been about $20 million in October 2004. But there had been a capital reduction which reduced its value to around $12 million, with Wool Equities' share worth about $9 million.
Then Canesis had made a $2 million loss in 2004-05, while two businesses had been sold off. That had brought overall book value down to $8 million to $9 million just after the end of 2005-06, he said.
And at the time the Canesis assets were sold, their value was just under $8 million.
On why Wool Equities was prepared to sell below book value, Pearce said the sale price was what his company and Canesis' co-owner were able to get out of AgResearch.
