PGW shareholders question health of Chinese shareholder
PGG Wrightson shareholders have been told there is “zero chance” of Chinese half-owner Agria going under amid speculation about its financial health.
At PGW’s annual shareholders meeting in Auckland today, Agria chairman Alan Lai – also a PGW director up for re-election – was asked to reassure shareholders about his firm’s financial health.
He said twice there was “zero chance” of Agria being put into receivership.
Agria's PGG Wrightson-related debt is two loans totalling $35 million, against Agria's $US200 million net assets, he says.
"I don't understand where you get this judgment from," he said during an exchange with a shareholder.H
Mr Lai says Agria is not considering selling its stake in PGW "at the moment".
PGG Wrightson director Bruce Irvine says the company does not wish to comment on Agria’s issues.
He preferred to talk about operational matters and some legacy issues left over from the sale of the finance arm.
That included being repaid in full $25 million owed by the failed Crafar farm enterprise. That money will be repaid by the end of November or the first week in December, he says.
Meanwhile, Mr Irvine says the board will put forward a dividend policy within the next 12 months.
Agria – a new hope
Agria bought into PGW in 2009 and launched a partial takeover in 2010.
It funded the $144 million 50.01% acquisition partly through debt and partly with equity financing through New Hope International, a much bigger Chinese agricultural conglomerate.
New Hope holds an option to require Agria to repurchase its shares in Agria Asia Investments between May 2013 and May 2014.
More pressing is a bank loan and a $10 million loan from Livestock Improvement, which matures this month.
Yesterday LIC said it was in talks with Agria over the loan regarding payment.
“In order to meet these repayment and repurchase obligations, we may need to extend our existing credit facilities or obtain new credit facilities,” Agria says in its latest annual report.
“If we are unable to extend existing facilities or obtain new ones, we may be required to sell a portion of our shares in PGW, which may lead to us no longer consolidating PGW’s results of operation, which would in turn have a material impact on our future reported results of operation.”
Agria shares have fallen below $1 on the NYSE. The exchange rules require the shares to trade above $1 and it has given Agria until mid-January to comply – otherwise it risks being delisted.
Last month the company announced an improved operating performance with earnings before interest, tax and depreciation (EBITDA) for the year ended June 30, 2012, at $55.2 million compared to $49.4 million in the year ended June 2011.
Net profit after tax was at $24.5 million, a $55.2 million turnaround from the 2011 loss of $30.7 million.
However, much of that was the result of a turnaround in accounting treatment of a supply contract with Silver Fern Farms.
More by Duncan Bridgeman and David Williams
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Comments and questions5
How are Sandy maier and the erst of the Ngai tahu board feeling about their investment in PGG W based on backing Agria into the company?
It's kind of a reverse ( Treaty ) grievance - normally they are reaching settlements with the Crown for past Crown indiscretions.
Now the Ngai Tahu members might be squeeling at their own Holdings board for current indiscretions if their investment has or is about to diminish dramatically. maybe they should have checked out Agria more thoroughly.
Agria's investment funds seem to be somewhat circular - similar to a George Kerr type of structure maybe??
It wouldn't have just been Sandy Maier making this investment decision.
Maybe it's time Ngai Tahu appointed some of their own whanau on to their board - and not just job for the boys and girls. Most other Iwi have fostered their own members into governance roles on their boards - and these people have also been successful in their own right in the business sector and professional sector.
Ngai Tahu was once the leading Iwi - now its turned into yesterdays Iwi model compared to many other iwi around the country
Time for change maybe??
With results like this I fail to see why there would be changes.
NTHC reported an operating profit of $55.1 million for the year ended June, up 17.8 million, or 48%, on the previous corresponding period (pcp) and nearly $6 million ahead of budget.
Reported profit for the year was $95.7 million, up $79.8 million on the pcp.
The operating return on equity for the corporation was 9.07% and the total return on equity 15.75%. Assets under management by the corporation increased by $81.5 million to $747.9 million. Total assets under management by the combined group increased by nearly $79 million to $809 million.
What a great legacy left by the previous PGGW board and management.
Same comments made about F&P Appliances and NZ Farming System.
Then, suddenly it's worth a lot more because someone else wants to take it over.
Grow up.