KEY POINTS:
A capital raising by PGG Wrightson missed its target with the listed rural services company caught in the eye of an international financial storm, says chairman Craig Norgate.
PGG Wrightson had aimed to raise about $100 million towards the $220 million cost of buying half of meat processor
co-operative Silver Fern Farms.
"[We] did expect to get it away successfully at somewhere around $2.50," Norgate said.
"The following day after the road show Lehman Brothers fell over."
PGG Wrightson was committed to raising the equity ahead of the first settlement of $145 million today with Silver Fern Farms.
"To have to re-work things was not easy so we decided to go ahead with the equity raising anyway."
In the end 43.4 million new shares were placed at $1.80 each, raising $78.1 million.
"Frankly, it's not a bad result given what the market's been like," Norgate said.
A shareholder placement plan at the same price was underwritten to $32 million and the borrowings would be on target.
NZX-listed PGG Wrightson's shares closed down 9c yesterday at $1.74, compared to $2.10 on Thursday.
"Concerned for those that are selling obviously but it's good buying for those that are doing the buying, Norgate said.
"The reality is the underlying cash-flows of the business don't change, so it's just uncertainty in the current market gets punished."
Rural Portfolio Investments - a Norgate joint venture with Otago's McConnon family - and interests associated with Murray Flett yesterday agreed to buy back 14 million NZ Farming Systems Uruguay shares sold to PGG Wrightson last week.
NZ Farming Systems Uruguay was set up by PGG Wrightson to develop dairy-farm operations in the South American country and floated on the NZX in December.
PGG Wrightson had budgeted to buy the shares, Norgate said.
"There was always the intent [to buy the shares], in fact we had expected to have done it back in July," he said.
PGG Wrightson had approached the parties to see if they were prepared to sell shares in NZ Farming Systems and invest the proceeds in the share offer, Norgate said.
"The key thing is that they [investors] supported us really strongly and if we're leaving a poor taste in their mouth we're uncomfortable with that."
The buy-back of NZ Farming Systems shares would not affect the placement of shares in PGG Wrightson, which would re-consider the transaction and other opportunities to buy shares at a later date.