PGG Wrightson to raise $180m

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PGG Wrightson is planning to raise $180.7 million through a fully underwritten renounceable rights issue.

The company said the renounceable rights issue of 401,530,068 shares would be priced at 45c a share.

The share issue and related agreements will result in a realignment of shareholdings between the existing cornerstone shareholders, Rural Portfolio Investments (RPI) and Pyne Gould Corp (PGC), and China-based Agria Corp.

RPI, which currently has a shareholding of 27.5 percent, has indicated that it will not subscribe for the shares to which it is entitled in the issue, and will sell approximately 58 per cent of its rights to Agria at a negotiated price.

RPI intends to subscribe for a small proportion of its rights entitlements and to sell most of its remaining rights through a book-build process to be managed by First NZ Capital and UBS. Upon completion of the rights issue, RPI will have a shareholding of at least 11.8 per cent.

PGC, which currently has a shareholding of 20.7 percent, has committed to take up all of its entitlement under the issue.

Upon completion of the issue, PGC will have a shareholding of approximately 18.3 percent. The reduction from the present holding of 20.7 percent to 18.3 percent reflects dilution resulting from the placement of PGG Wrightson shares to Agria referred to above.

Agria will be eligible to participate in the rights issue with respect to the 41.1 million shares it will receive by way of the placement announced on October 16.

Agria will also exercise the rights purchased from RPI.

As a result of Agria's participation in the rights issue and the exercise of rights purchased from RPI, Agria is expected to reach a shareholding of 19.0 percent in PGG Wrightson.

The PGGW board has commenced a formal governance review to examine the balance of skills required and the desired board composition.
Agria will be entitled to nominate two directors to the board following completion of the rights offer.

PGG Wrightson Finance also received a $32.5 million funding boost as part of a capital raising and funding plan by its parent.

PGG Wrightson and Agria Corp have agreed a funding package of approximately $32.5 million to be targeted to PGG Wrightson Finance.

Last month China-based Agria agreed to take a 13 per cent equity position in PGGW as part of recapitalisation needs of the New Zealand rural services company.

"The (PGGW Finance) agreement, announced today along with a rights issue by PGG Wrightson, follows the establishment of a co-operation agreement between PGG Wrightson and Agria last month,'' the companies said.

PGGW Finance is a leading specialist rural finance company, with a total loan book value of approximately $560 million at 30 June 2009.

Under the agreement PGG Wrightson will issue convertible redeemable notes (CRNs) to a value equivalent to US$25 million (approximately NZ$32.5 million) to Agria.

The proceeds from the CRNs will be invested as new capital into PGG Wrightson Finance, to enhance regulatory capital and provide greater liquidity and capacity for growth in that business.

PGGW Finance already has a diversified funding base that includes deposits, bonds, parent company equity and the support of three major banks, PGG Wrightson managing director Tim Miles said today.

"This additional funding will supplement the existing capital base, and this will assist PGG Wrightson Finance to pursue its business plan in a changing commercial and regulatory environment.''

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