Rural services and supplies company PGG Wrightson has announced a renouncable rights issue of more than 400 million shares to generate $180 million under a new capital raising plan.

The company was put on a trading hold earlier this morning pending the announcement.

Majority shareholder Pyne Gould Corporation and Rural Portfolio Capital, partly owned by Craig Norgate and Baird McConnon's Rural Portfolio Investments (RPI) are also in trading halts this morning.

In a notice through the NZX, the company said the shares would be issued to existing shareholders at a ratio of nine new shares for eight shares already held.

This is part of a plan to raise funds to pay $200 million worth of debt to Westpac by March, 2010.

The company is tied to a new banking facility that requires payment of $200 million by March next year after the balance sheet was torn apart by writedowns relating to Silver Fern Farms and its investment in subsidiary company NZ Farming Systems Uruguay.

The shares – worth nearly $3 a year ago – closed last night at 69c. Trading was halted at 65c this morning.

A boardroom clean out is expected to follow the capital raising.

Last month, Chinese company Agria agreed to buy 13% of PGG Wrightson for $36 million. The deal is subject to Overseas Investment Office approval.

A media briefing is expected to be held at 12pm today.