Queensland Cotton Buys Twynam Gins

SYDNEY - Jan 18/06 - SNS -- Queensland Cotton Holdings Ltd. paid A$25 million for a majority interest in the ginning assets of the Twynam Group.

Under the deal, the Colly Marketing business will be wound down and Queensland Cotton gains ownership of Twynam's Collymongle, Warren and Mungindi gins in New South Wales. The company also gets exclusive rights to gin Twynam's upland cotton crop grown in the ginning zones for the next five to six years and rights to market Twynam's cotton over the same period. Twynam will be Queensland Cotton's key supplier of cotton in the region, representing a new industry partnership.

Incentive payments of up to a maximum of $10 million will be payable if Twynam delivers certain minimum volumes of cotton to Queensland Cotton over the next five to six year period.

Queensland Cotton's Chief Executive Officer, Richard Haire, said, "The acquisition will provide the company with the opportunity to access around 50% of the New South Wales cotton crop, with the three gins capable of processing more than 260,000 bales per season,"

Queensland Cotton already has commenced an improvement program for the Mungindi, Collymongle and Warren gins to ensure they will be ready for a good start to the 2006 ginning season.

"We have brought in a Lummus equipment expert from the United States to oversee the improvement program for the three gins. In addition, we will be complementing the existing staff levels by using a number of our experienced staff at the gins. Further to this we will be drawing on the strong experience base of our United States ginning operations which have now completed their northern hemisphere season," he said.

Haire said Queensland Cotton was considering its position in relation to the proposed merger with Namoi Cotton Co-operative. "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."