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Wrightson sells stock at 14% discount to fund Silver Fern

Friday 26th September 2008

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PGG Wrightson Ltd., New Zealand's biggest rural services company, sold stock at NZ$1.80 apiece, a 14% discount, to help fund its purchase of a half-stake in Silver Fern Farms. The shares dropped to NZ$1.85 when a trading halt was lifted.

The company raised NZ$78.1 million by selling 43.3 million shares after a bookbuild, the company said in a statement. It plans to raise another NZ$25 million in a placement at the same price.

Before today, Wrightson's shares had tumbled 24% in a month on concern chairman Craig Norgate's ambition to become part of a vertically integrated farm-to-supermarket meat supplier has changed the risk profile of the company.

Risks include the ability to wring out cost savings in livestock procurement by convincing farmers to sign up to more exacting supply contracts.

The company plans to use debt to fund the balance of its NZ$220 million investment in cooperative Silver Fern.

Four analysts who follow the stock rate it a "hold" and two recommend selling the shares.

Goldman Sachs JBWere (NZ) was the lead manager and sole bookrunner for the sale.

By Jonathan Underhill

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