Wednesday 23rd January 2019
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PGG Wrightson says current chair Joo Hai Lee will step down before June 28 but that the board will continue its governance review in the meantime.
Lee represents Wrightson’s former majority shareholder, Singapore-registered Agria, and took over as chair in early November after Agria principal Alan Lai abruptly resigned the day before the scheduled annual shareholders’ meeting.
Wrightson says in a statement that the board “will provide an update in the near future regarding the outcomes of the review and the chair’s appointment.”
Agria now owns 46.6 percent of Wrightson after it was forced to sell down its previous 50.2 percent stake by the Overseas Investment Office. That was achieved by unwinding Ngai Tahu’s stake in a joint venture with Agria, with the iwi now owning 3.6 percent of Wrightson in its own right.
Bruce Irvine, chair of Wrightson’s independent directors, says his committee “has continued to monitor matters relating to the OIO investigation and settlement and assess implications for PGW.”
In January last year, the OIO confirmed it had started an investigation into Agria and Lai’s “good character” status, a condition of its Wrightson ownership. It forced the share sell-down in December after Agria and Lai reached a settlement with US regulators relating to fraudulent accounting and market manipulation.
Agria was fined US$3 million and Lai US$400,000, as well as accepting a five-year management ban, by the US Securities and Exchange Commission. The OIO is now seeking financial penalties here.
Wrightson’s statement didn’t mention the $434 million sale of the company’s seeds business to Danish co-operative DLF Seeds, which is expected to deliver Wrightson a $120 million capital gain, but Wrightson has confirmed there has been no change to the sale’s status.
The Commerce Commission has expressed concerns about the potential concentration of power in the ryegrass seeds market which it said may allow DLF to raise prices or reduce the quality to customers.
Its decision is due by Feb. 14.
The New Zealand Shareholders’ Association has said that the seeds sale was clearly driven by Agria’s need to reduce debt rather than by what is in shareholders’ best interests.
Last month, Wrightson said its seeds business will make a loss after tax in the six months ended December and that it has had to bail out its joint venture partner in Uruguay.
However, it said this won’t affect the seeds sale because DLF has assumed all the seeds business risks and rewards since June 30 last year, assuming the sale proceeds.
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