Agria's legal problems passed due diligence, Wrightson says

Thursday 22nd October 2009

Legal problems facing PGG Wrightson's new cornerstone shareholder, Agria, had been inspected under due diligence, which found "no issues of significant concern," said chairman Keith Smith.

The statement is a letter to shareholders setting out details already announced relating to Agria's purchase of a 12% interest in the troubled local icon, PGW, part-owned by interests associated with kiwi investors Craig Norgate and Baird McConnon.

Smith referred to "some media reports (of) governance and legal issues Agria is dealing with – ie. the filing of its 2008 annual report and the existence of class action lawsuits based on the company’s initial public offering in 2007".

Agria operates in China, is headquartered in the Cayman Islands, a tax haven, is listed on the New York Stock Exchange in 2007, and faces a class action suit relating to apparent misleading and omitted disclosures in its initial public offering registration statement. Its total assets, at US$138.4 million ($187 million), compared to PGW's at $205 million. Agria will "vigorously contest" the allegations.

Smith says: "PGG Wrightson’s due diligence, with the assistance of professional advisers, found no issues of significant concern. We are confident these matters will be resolved satisfactorily and without any impact on the agreements between PGG Wrightson and Agria."

The deal is an integral part of PGW's plans to raise as much as $115 million from shareholders and repay loans of some $200 million by next March.

The deal is being sold as synergistic, with PGGW and Agria both strong in seed production, and PGW able to bring business models for rural financial services franchises and livestock auction systems, assisted by cash and market access through Agria.

Businesswire.co.nz

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