Agria Corp takes cornerstone share

The Press

TOUGH TIMES: Craig Norgate will sell his company's rights to buy new PGG Wrightson shares to China-based Agria Corp, leaving it with a 19pc stake.

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PGG Wrightson's $180.7 million capital raising will see upstart Chinese firm Agria Corp take over the top cornerstone position with a 19 percent stake, pushing ahead of traditional large stake holders.

Agria Corp's already announced intention to take 13 percent of PGGW was bolstered yesterday after Craig Norgate's Rural Portfolio Investments (RPI) took a back seat in the capital raising.

PGGW announced its intention to issue 401 million shares at 45 cents each in a renounceable rights issue to existing shareholders to raise $180 million to reduce its debt.

Mr Norgate – short of funds himself – has agreed to sell his company's rights to buy the new shares to Agria but he says he remains committed to PGGW as a director and investment in the rural sector.

PGGW bosses played down troubles Agria, a China-based entrepreneurial company, has seen particularly regarding its United States-listing in 2007.

PGGW's shares yesterday closed 1c lower at 64c after the capital raising news.

The 45c a share price for the rights issue is a 30.7 percent discount to the 65c they were trading ahead of the capital raising detail.

PGGW's shares have been under pressure because of concerns about the company's debt and the wider rural and farming scene it services, falling from a 12 month trading peak of $1.67.

Mr Norgate said RPI's own payment obligations in the period from April 15, 2010 to New Zealand financial institutions remained dependent on a recovery of PGGW's share price.

On April 15 RPI would need another $2.1m to put into an escrow account for the payment of dividends to redeemable preference shareholders.

"We're certainly not out of the woods ... we've got to see that PGGW price recover," Mr Norgate said, adding that he supported Agria's involvement.

Class actions from groups of American investors who bought shares in Agria's initial public offer on the New York stock exchange in 2007 have prompted concerns.

PGGW managing director Tim Miles said yesterday the fact Agria had received Overseas Investment Office approval gave the New Zealand rural services company comfort in dealing with an overseas entity.

"We're unable to comment because there is a motion in front of the US court at the moment for dismissal."

PGGW is due to pay the banks $200m by March 2010, with an additional $70m of debt reduction predicted in the period to June 30, 2010.