Silver Fern agrees to mediation with Wrightson

By Paul McBeth

Tuesday 3rd March 2009

Silver Fern Farms, the Dunedin-based meat cooperative, agreed to enter mediation with PGG Wrightson, New Zealand's biggest rural services company, over its failed acquisition of a half stake last year.

The meat cooperative has been seeking damages from Wrightson since November when the rural services supplier defaulted on its agreement to acquire a 50% holding in Silver Fern Farms for $220 million. It declined an offer of $10 million in February, calling it inadequate compensation.

"PGW has accepted that it was in breach of its agreement, and that Silver Fern Farms justifiably terminated the contract," Silver Fern Farms said in a statement. "The issue between the parties now relates solely to compensation for damages caused by PGW's default on the unconditional contract, and the costs of the transaction and costs flowing from the breach."

Retired High Court judge Robert Fisher has been appointed to mediate an agreement between the parties. The mediation isn't binding unless both parties agree on a settlement. It will conclude by April 18.

PGG Wrightson posted a first-half net loss of $32.8 million on the costs of the failed merger and a writedown in its stake in New Zealand Farming Systems Uruguay, but has secured refinancing of about $475 million loan facilities. Its stock rose 1% to $1, adding to its 8.8% gain yesterday.

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