Agria to take stake in Wrightson

Friday 16th October 2009

Agria, the China-based seed and agricultural research company, will take a 13% stake in PGG Wrightson under a cooperation agreement that’s dependent on Wrightson raising enough capital to repay $200 million of debt due in March.

Agria, which trades on the New York Stock Exchange, would buy Wrightson shares at 88 cents apiece, for a total of $36 million, the companies said in a statement today. Shares of Wrightson soared 23% to 80 cents on the NZX today.

The agreement will open the door to China’s rural sector, which isn’t currently served by a mature rural services company. Agria and Wrightson will cooperate on seed development, livestock, agricultural services and research, rural services in China, rural financing and dairy conversions along the lines of NZ Farming Systems Uruguay. Over time, Agria will become a major shareholder of Wrightson, they said.

“We have now identified a partner whose business profile and intentions are truly compatible with our own,” Wrightson chairman Keith Smith said.

Agria’s businesses include corn seed, sheep breeding and berries, with extensive distribution in China, according to the presentation.

Wrightson has been searching fro a new cornerstone shareholder after winning agreement from its banks in August to increase its facilities by about $150 million and extend the term of its debt.

It hired First NZ Capital and UBS to assist with a capital review and study of options for meeting its new bank debt schedule including an equity raising.The nation’s largest rural services company posted a full-year net loss of $66.4 million, reflecting a drop in the value of its holding in NZ Farming Systems and costs of its failed merger with Silver Fern farms.

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.

Smith took over from former chairman Craig Norgate, who stood down in July, having led the company’s development of Farming Systems and driven the push for the Silver Fern merger.

Today Smith said Wrightson plans to announce details of a rights issue in early November.

Agria’s depository receipts rose 1.4% to US$2.19 on the NYSE yesterday. They have climbed 47% in the past six months.

Businesswire.co.nz

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