Wrightson unlikely to close current Silver Fern deal

Thursday 30th October 2008

PGG Wrightson is unlikely to complete its investment in Silver Fern Farms in its current form because of ongoing financial market turmoil, Chairman Craig Norgate said.

Wrightson failed to settle the first NZ$145 million payment of its NZ$220 million purchase of a half stake in Silver Fern in September because some of its banks wouldn't approve the financing. The company was forced to cancel a share sale that made up the bulk of the first payment.

Norgate said Wrightson is now "working through a number of options" to bolster returns from export meat shipments, a process that is being slowed by market volatility.

"It is fair to say that we are now unlikely to be able to consummate the transaction in its current form within an acceptable timeframe to Silver Fern," Norgate told shareholders at their annual meeting.

The rout in global stock markets and the credit crisis also undermined NZ Farming Systems Uruguay's plan to raise funds to buy more land for dairy conversion and has weighed on the shares of the company set up and part-owned by Wrightson.

Shares of Wrightson rose 5% to NZ$1.67 and has declined 40% in the past three months. NZ Farming Systems jumped 14% to NZ$1.16 today, trimming its slide in the past three months to 43%.

Norgate said the New Zealand dollar's decline this year will help lift returns for farmers. Still, weaker shares meant Wrightson would probably reap a smaller performance fee from NZ Farming Systems.

He reiterated the company's forecast for annual profit of NZ$50 million to NZ$55 million, or NZ$46 million to NZ$51 million excluding the performance fee.

By Jonathan Underhill

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