PGG Wrightson posts $32.8 million loss

Last updated 00:57 05/03/2009

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Farm supply and services group PGG Wrightson posted a loss of $32.8 million for the six months to December 31, 2008 saying it has received bank refinancing and commitments from major shareholders.

PGW said its was reaffirming its full guidance for the full year last amended in December.

The company said two major shareholders, Pyne Gould Corp (PGC) and Craig Norgate's Rural Portfolio Investments (RPI), do not intend to sell shares and are committed to PGW.

PGC had reaffirmed their commitment to PGW and more particularly have made it clear that they had no intention to sell in this market, the company said in a statement.

The market has also been concerned about the possible effect of RPI needing to redeem 42.5m of its own redeemable preference shares in April, the company noted. "The concern arises from the suggestion that RPI might have to sell shares on market if they had problems refinancing.

"RPI has advised that arrangements for the redemption of the redeemable preference shares are well advanced and do not involve any sale of any shares."

PGG Wrightson said it had received bank commitments to the refinancing of all its existing bank facilities, subject to completion of documentation.

The total facilities provided though ANZ, BNZ and Westpac amount to $475 million.

PGG Wrightson reported a 32 per cent increase in net profit before tax to $22.1 million from $16.8 million reported for the 2007 December half.

But the bottom line was an accounting loss of $32.8 million for the period given one-off items including fair value adjustments and a provision for expenses occurred during its failed partnership agreement with meat processing cooperative Silver Fern Farms.

Fair value adjustments totalled a loss of $47.2 million, compared with a profit of $10 million in the previous December half.

"Within the latest figure, $35.2 million was related to the value of the group's shareholding in NZ Farming Systems Uruguay, $9.3 million to the `marking to market' of open contracts hedging foreign currency and interest rate exposures and the expenditure relating to the SFF transaction of $17 million, of which $10 million is a provision at balance date.

"Of these items,only the SFF expenditure has a cash impact."

The PGGW board has amended its dividend policy to maximise debt amortisation.

But to provide certainty to shareholders and to enable an orderly transition to the new policy, an interim dividend of 5 cents per share will be paid to shareholders registered at the record date of 13 March 2009 issued in the form of taxable bonus shares.

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