Wrightson may sell assets, seek new shareholders after renewing debt facilities

Thursday 27th August 2009

PGG Wrightson, the unprofitable rural services company, may sell assets and bring in a new cornerstone shareholder after increasing its bank facilities by about $150 million and extending the term of its debt.

Wrightson hired First NZ Capital and UBS to assist with a capital review and study of options for meeting its new bank debt schedule. “Any equity raising is likely to involve both existing shareholders and new investors, and may also include the introduction of a new cornerstone shareholder,” it said today.

The company posted a full-year net loss of $66.4 million, from a year-earlier profit of $73 million, mainly reflecting one-time charges to settle its failed merger with Silver Fern Farms and recognize a drop in the value of its stake in NZ Farming Systems Uruguay. It also didn’t receive a performance fee from Farming Systems. EBIT slipped to $74.5 million from $77.8 million.

Shares of Wrightson slipped about 6% to 79 cents, the lowest since Feb. 25. The stock has shed about 70% of its value in the past 12 months.

The company had to seek a waiver from its banks and from South Canterbury Finance because of the impact of adverse trading conditions in the final four months of the financial year, it said today.The waiver gave it room to renegotiate and extend its facilities including an agreement from South Canterbury to stretch its debt until February 2013.

“While the medium-term international agricultural sector outlook remains robust, the ongoing global recession is dampening farmer confidence leading to restricted spending,” managing director Tim Miles said in the statement today.

“While sheep and beef farm incomes have improved to their best levels in recent years this has not yet been reflected in expenditure which has been kept to a minimum given the past poor returns,” Miles said. Weak dairy prices “are a significant concern.”Sales in the full year of $1.3 billion, little changed from a year earlier.The company won’t pay a final dividend.

Businesswire.co.nz

Comments from our readers

No comments yet