Norgate's RPI seeks funding as Wrightson cancels dividend

Monday 31st August 2009

Rural Portfolio Investments, the private investment vehicle of Craig Norgate and Baird McConnon, will be forced to increase borrowing or sell assets to fund its cash requirements after 27%-owned PGG Wrightson omitted its final dividend.

RPI's Wrightson stake and its 10 million shares in NZ Farming Systems Uruguay can’t be sold because they were put up as security on the company’s redeemable preference shares, it said in a statement.

It needs to find additional funds by October 15. “A significant portion” of RPI’s cash funds had come from Wrightson dividends and the lack of a final payment means the group “will now review refinancing strategies to arrange funding as required,” RPI said.

”This funding may be sourced from either further borrowings or a sale of available assets.”

Norgate last month stepped down as chairman of Wrightson, saying the nation’s largest rural services company, needed an independent leader for the next stage of its growth, following its formation from the 2005 merger of Wrightson and Pyne Gould Guinness.

Wrightson said it wouldn’t pay a final dividend after last week reporting an annual loss of $66.4 million.

It hired First NZ Capital and UBS to assist with a capital review and study of options for meeting a renegotiated bank debt schedule, which may include the sale of assets and equity-raising, including a new cornerstone shareholder.

The loose grouping of mainly South Island-based finance and agricultural services companies have received a battering this year.

Pyne Gould Corp., which owns 21% of Wrightson, posted an annual loss of $54.4 million, while South Canterbury Finance, which extended a convertible loan to Wrightson to help it settle its failed merger dispute with Silver Fern Farms, reported a net loss of $69 million.

Rural Portfolio Capital, a finance subsidiary of RPI, today reported a 0.6% gain in annual revenue to $4.77 million, while net profit rose 25% to $35,000.

Businesswire.co.nz

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