Sheep farmers to share $35.9m

Up to 16,000 sheep farmers are set to share in a cash payout of $35.9 million from the Wool Board's $109.1 million reserves as the board winds up operations.

Farmers have started receiving details of the proposed payouts, accompanied by a three-question referendum.

The board wants answers to questions - confirming a desire to wind up the board, accepting the allocation of assets according to the number of sheep owned, and picking limits on share trading and accumulation - by May 22 to underpin its request to the Government for a swift passage of the legislation necessary to break up the producer board.

Board chief executive Mark O'Grady said the board needed to demonstrate to the Government that it had a mandate for the industry reforms set in train by the McKinsey restructuring review.

"The timeline is tight, and is very dependent on whether we are able to get legislative support as early as we hope," he said.

Farmers would later get separate information, a type of prospectus, with the financial details they needed to decide whether to retain shares in the commercial companies, or sell them, but in the meantime they could register for the payout.

Depending on how many farmers register, they are likely to receive the cash equivalent of 80c a sheep, though merino farmers will receive only 50c a sheep.

Farmers had been expected to receive the cash equivalent of $1 a head for each of the industry's 43 million sheep, but in addition to $17 million to fund the transition of Wool Board companies to direct grower ownership, the board has had to deduct a further $21.9 million from the reserves, to pay wind-up costs.

Board executives said the wind-up costs were high largely because of the expense of closing its international offices, where redundancy costs and pension payouts were required because the board is effectively closing down.

These include $9 million to close a former International Wool Secretariat pension scheme in Europe covering 24 present members and 51 other beneficiaries.

The money remaining from the board's reserves in companies, property, intellectual property, and cash will be paid out as redeemable preference shares, including $1.2 million to farmers producing mid-micron wools.

- NZPA