The assets of Rural Portfolio Capital (RPC) and Rural Portfolio Investments (RPI), companies associated with businessman Craig Norgate, were today put in the hands of receivers.
Trustees Executors, as security trustee for investors in RPC redeemable preference shares, appointed Kerryn Downey and Andrew Grenfell of McGrathNicol as receivers to the secured assets of the two companies.
The receivers will now secure assets that include 46.8 million shares in PGG Wrightson, 10 million shares in New Zealand Farming Systems Uruguay and $742,314 in an escrow account.
The decision followed RPC's announcement this morning that it was in breach of its security trust deed. The preference shares were automatically and immediately redeemed, cancelled and delisted.
At Friday's closing sharemarket prices, the $60 million of preference shares were backed by only $29.64 million of assets.
Mr Norgate earlier expressed disappointment that RPC was in the hands of its trustee.
"We are obviously disappointed. We've worked for 18 months to try to make sure we didn't have this sort of outcome," he said.
On Friday, RPC said it was unable to find $1.45 million needed to top up the dividend escrow account and this constituted an enforcement event under the trust deed, with a remedy period until May 17.
RPC said today that after talks with the trustee it concluded that a further event of default had arisen and the trustee was entitled to take enforcement action immediately.
Mr Norgate said the sensible outcome would be for the redeemable preference shareholders to hold the shares until they could recover the capital.
A decision by PGG Wrightson to discontinue dividend payments expected in October 2009 and April 2010 reduced cashflow, while a drop in the share price of PGG Wrightson and NZ Farming Systems Uruguay reduced the value of the security.
Mr Norgate said there were about 1400 holders of the redeemable preference shares. The company had run out of options when it sold 48.45 million PGG Wrightson shares last month, he said.
"We would definitely have rather held the shares," he said.
Mr Norgate declined to comment on speculation that his future was outside the agriculture sector.
"The biggest investment for me was seven years of hard work and the opportunity cost of that," he said.
He had been involved in the rural sector for 25 years. His future may not be in the sector, though he is still on the board of several rural companies he is passionate about.