-
Source: ONE News -
Related
New Zealand's largest rural services provider PGG Wrightson has agreed to take on a cornerstone shareholder.
The company on Friday said that Chinese agricultural solutions provider Agria Corporation will take $36 million in new shares.
The shares will be issued at 88 cents each, 35% above the 65 cents share price last traded before a halt was placed on Friday morning.
The new equity represents a 13% stake in PGG Wrightson.
This stake could grow in the future, with PGG Wrightson saying both parties would like to see Agria become a significant shareholder over time.
"They could go up to 19.9% without the takeover provisions kicking into effect," says Craigs Investment Partners analyst Rob Groenendal.
PGG Wrightson in August said it was considering seeking a cornerstone investor after posting a net loss of $66.4 million in the year to June 30 - a 190.8% drop in its profit of $73.2 million last year.
The company has been under debt pressure, with debt more than doubling from $174.2 million last year to $445.04 million this year.
A loan of $200 million is due to be fully repaid by the end of March 2010.
The deal is conditional on PGG Wrightson being able to raise enough money to repay the $200 million debt.
PGG Wrightson's board says it is considering equity raising options to raise these funds, possibly via a rights issue, and is expected to make an announcement early next month.
Agria is listed on the New York Stock Exchange.
