still on qch radar (From...

still on qch radar
(From http://sg.biz.yahoo.com/060118/15/3y00c.html)

Thursday January 19, 5:34 AM
INTERVIEW: Namoi Still On Queensland Cotton Radar

(This article first issued Wednesday evening)
By Ray Brindal
Of DOW JONES NEWSWIRES

CANBERRA (Dow Jones)--With more local consolidation likely, Queensland Cotton Holdings Ltd. (QCH.AU) Wednesday said it will buy most of unlisted Twynam Agricultural Group's ginning assets for A$25 million.

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"It means that we are the company with the broadest coverage of the Australian cotton industry, bar none," QCH chief executive Richard Haire told Dow Jones Newswires.

"There's no other company that goes close to matching our geographic footprint for ginning and marketing," Haire added.

Queensland Cotton will buy three of Twynam's gins or processing mills at Collymongle, Warren and Mungindi in New South Wales, have exclusive rights to gin Twynam's upland cotton crop grown in these zones for the next five to six years and have rights to market Twynam's cotton over the same period.

The deal represents an effective wind-down of Colly Cotton, Twynam's marketing unit, which once marketed a quarter of Australian output.

A cotton gin that Twynam operates in a joint venture with Namoi Cotton Cooperative Ltd. (NAM.AU) isn't covered by the deal.

Queensland Cotton hasn't formally abandoned its unsuccessful plans to takeover Namoi, but will consider and make a ruling in coming days, Haire said.

"We see this as being a good plan B and certainly not an inferior option" to a Namoi bid, he said. Namoi shares ended Wednesday trade at 65 cents, valuing the company at A$76 million.

The Twynam purchase delivers nearly as broad a reach for Queensland Cotton as a successful Namoi bid would have, but at a fraction of the price, he said.

"From a value proposition, it's got some real advantages."

QCH and Namoi are the two biggest cotton companies in Australia. Queensland Cotton also gins cotton in the U.S. and markets the fiber in the U.S. and Brazil.

"We believe further rationalization of the Australian cotton industry is inevitable given the competitive and fast changing nature of the global cotton market and Queensland Cotton intends to be the leader in this area," Haire said.

"This isn't the start of it and isn't the finish of it."

Further rationalization likely will occur in marketing, with too many buyers chasing what is a small crop by global standards, he said. Australia produces less than 3% of global output.

The Tywnam purchase still leaves Queensland Cotton outside the top five global cotton companies.

"The big gorillas are offshore," Haire said.

-By Ray Brindal, Dow Jones Newswires, 612 6208 0902;
[email protected]
-Edited by Ian Pemberton