No cash for Silver Fern deal

PGG Wrightson was still struggling to find the capital needed to progress the merger with Silver Fern Farms, chairman Craig Norgate said yesterday.

Mr Norgate said he was unsure when his company would hand over the first instalment of $145 million for a 50 per cent share in Silver Fern Farms after it missed the October 1 deadline. "The financial markets need to settle down first. We can give no certainty at the moment."

PGG Wrightson had the month of October to settle after Silver Fern Farms' shareholders voted in favour of the partnership, but it now appears increasingly likely that deadline will be pushed out even further.

The $220 million cash injection, the balance of which was payable in the first quarter of next year, would be used to reduce Silver Fern Farms' debt, allow the company to develop new markets and to invest in new technology, such as robotics at its Finegand plant near Balclutha, at a faster pace.

Raising capital in the current financial environment was proving extremely difficult, Mr Norgate said. "We're working our way through it, but it's not easy." However, Mr Norgate, who was expected to update his shareholders at PGG Wrightson's annual meeting in Christchurch today, said both parties were still committed to the partnership.

He had been talking to large investors but he refused to elaborate further when questioned by The Southland Times. Today's meeting also coincides with the release of Silver Fern Farms' annual result. The company is expected to post a $40 million net profit.

Silver Fern Farms chairman Eoin Garden said he was confident the partnership would go ahead, but no new deadline had been set for the payment of the first instalment. "The financial environment is very difficult for businesses at the moment.

"We will make an announcement when we have something to say," Mr Garden said. It was unlikely any penalties would be imposed on PGG Wrightson for missing the October deadline, he said.

This month livestock drafters moved into dual-branded clothing and started procuring stock under the partnership, a move that had been described as putting the cart before the horse. Meat Industry Action Group chairman John Gregan believed it would be "business as usual" if the partnership did not go ahead but he remained optimistic.

However, he was concerned about a potential procurement war this season, with about 3 million fewer lambs to process in the South Island.

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