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Farmer holds PGG Wrightson book - Source: ONE News -
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Rural services company PGG Wrightson is planning to raise $180.7 million through a fully underwritten renounceable rights issue.
Under the offer, shareholders are entitled to subscribe for nine new shares for every eight held, at an issue price of 45 cents per share.
The rights issue is fully underwritten by UBS New Zealand Limited and First NZ Capital Securities.
Altogether, PGG Wrightson is aiming to raise $249.4 million through three capital raising initiatives.
These initiatives include the issuing of 41.1 million new shares to Beijing-based Agria Corporation for 88 cents each, raising $36.2 million, which was announced last month.
PGG Wrightson says that placement would be completed by Monday, meaning Agria would be eligible to participate in the rights issue.
PGG Wrightson will also raise about another $32.5 million through a placement of convertible redeemable notes in PGG Wrightson to Agria.
The proceeds will be reinvested in PGG Wrightson's finance division to boost its liquidity.
PGG Wrightson said the proceeds of the capital raising and the cash generating initiatives would be used predominantly to repay debt, principally a $200 million amortising debt facility due by March 31.
The company says the total reduction in net debt outstanding during the year to June 30, 2010 was expected to be about $277 million. This would comfortably exceed a debt repayment schedule agreed with PGG Wrightson's banking syndicate earlier this year.
The share issue and related agreements would result in a realignment of shareholdings between the existing cornerstone shareholders, Rural Portfolio Investments (RPI), Pyne Gould Corporation and Agria.
RPI, which currently has a shareholding of 27.5%, had indicated it would not subscribe for the shares it was entitled to, and would sell about 58% of its rights to Agria at a negotiated price.
RPI did intend to subscribe for a small proportion of its rights entitlements and to sell most of its remaining rights through a bookbuild process. When the rights issue was finished RPI would have a shareholding of at least 11.8%.
Pyne Gould, which now has a 20.7% stake, had committed to take up all of its entitlement, resulting in a shareholding of around 18.3%.
Agria was expected to reach a shareholding of 19% in PGG Wrightson.
PGG Wrightson managing director Tim Miles said difficult trading conditions experienced from the final quarter of the 2009 year had persisted into the current trading period.
But the company was making progress through improvements to its operating performance and efficiency.
Figures in the simplified disclosure prospectus registered today put operating earnings before income, taxation, depreciation and amortisation at $73.4 million for the year to the end of June 2010, compared with $80.9 million for the 2009 year.
The prospective financial information did not take into account any revenue that may arise from the co-operation agreement with Agria.
A trading halt on PGG Wrightson shares, which last traded on Thursday at 65 cents, is to remain in place until the outcome of the bookbuild and placement is announced.
