Pyne Gould $30m carrying value loss on PGW shares

Friday 24th December 2010 1 Comment

Pyne Gould Corp's decision to sell its 18.3% stake in PGG Wrightson into a partial takeover offer resulted in a carrying value loss on the shares of about $30 million for Pyne Gould.

Pyne Gould said today that its PGG Wrightson shareholding was equity accounted at its carrying value of 82c per share.

With the proposed Agria offer at 60c, Pyne Gould would reflect the impact of that carrying value loss of about $30 million in its profit and loss account for the half year, but that would not affect underlying operating earnings.

Pyne Gould announced today that it had signed a lock-up deed with Chinese agricultural company Agria to sell its PGG Wrightson shares into Agria's proposed partial takeover offer of that company.

The acceptance of Pyne Gould's stake would be subject to scaling which may result in it continuing to own some PGG Wrightson shares, which it intended to divest, Pyne Gould said.

Some further adjustments to carrying values could be necessary in the full year to reflect any change to the 60c carrying value of any PGG Wrightson shares retained at balance date.

Agria, which already holds 19.01% of PGG Wrightson, is aiming to lift its stake to 50.01% with an offer of 60c per share being made in a bid along with another Chinese agricultural company, New Hope Group.

Pyne Gould also said today it was expecting its underlying result for the six months to December 31 to be in a range from a net profit of $1.7 million to a net loss of $300,000.

In the previous corresponding period, normalised net profit was $6.3 million.

The bottomline net loss for the current half year was expected to range between $31 million and $33 million, mostly due to the $30 million non-cash carrying value adjustment for the PGG Wrightson investment. A year earlier Pyne Gould reported a net profit of $10.1 million, the company said today.

Pyne Gould's assets include 100% of financial services firm Marac, which is merging with Canterbury Building Society and Southern Cross Building Society to form a "new regional banking model".

Pyne Gould also owns all of Perpetual Trust and of Perpetual Asset Management.

NZPA

Comments from our readers

On 29 December 2010 at 12:29 pm Arty said:

Why would PGC not sit out PGCW poor performance,rather than selling at loss, get in and force a turn around. PGC is not cash stapped. Is something else driving this exit at a loss? The question is, will PGCW turn around into a good profitable comapny, the answer in my view is yes - if it sticks to the knitting, so why sell now, especially with direct link to Chinese markets possible.