Rural Portfolio sells half of Wrightson stake

Wednesday 21st April 2010

Rural Portfolio Investments, the investment company of Baird McConnon and Craig Norgate, has sold down its stake in PGG Wrightson, raising money to repay debt and top up its dividend escrow account.

A unit of RPI sold 6.4%, or 48.5 million shares, of Wrightson for 56 cents apiece, raising $27 million in an off-market transaction, the company said in a statement. The shares had been held as security for borrowings and the sale proceeds will be used to repay the debt, leaving a surplus to cover ongoing costs and add to the escrow account.

RPI continues to hold 6.2%, or 46.8 million shares, in Wrightson.

RPI disclosed this month that it had breached the terms of its Security Trust Deed after making its six-monthly dividend payment on its $60 million of redeemable preference shares. The payment drained the funds from the escrow account, which is required to at all times hold enough to meet its next obligation, in this case the dividend due on Oct. 15. Under the deed, it has 30 days to remedy the breach.

Rural Portfolio “will continue to review alternative sources of funds to complete the top up of the account to the required level within the remedy period,” it said in the statement.

Shares of Wrightson climbed 3.6% to 58 cents today.

RPI’s stake in Wrightson was watered down to about 13% from 27% following Wrightson’s rights issue last year, in which RPI didn’t participate.

Wrightson announced last August that due to an annual loss of NZ$54 million it would not be paying a dividend. A significant portion of RPI’s cash funds had come from Wrightson dividends.

Businesswire.co.nz

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