Norgate sells half of PGW stake

Craig Norgate. Photo / Richard Robinson

Craig Norgate's investment business has more than halved its stake in PGG Wrightson and could completely exit the business he was instrumental in putting together.

Rural Portfolio Investment Securities, a company owned by Norgate and the McConnon family's Rural Portfolio Investments, yesterday sold a 6.4 per cent stake in rural supplier Wrightson for 56c per share, realising around $27 million.

Norgate said he had hoped to sell the shares to one bidder but had ended up selling them to a range of New Zealand and Australian institutional investors after "the other party couldn't get there". He would not say who the other party was.

The deal leaves Rural Portfolio Investments with just 6.1 per cent of Wrightson - a major step-down from the 27.5 per cent stake it owned in November last year before Wrightson had to raise $180 million through a rights issue.

Norgate said the price had been less than what he had hoped for.

"What we have had to sell it at has not been particularly great. We would have liked to have got more for it."

RPI had come under pressure to sell the investment to meet the dividend payment for $60 million in listed preference shares for its financing arm Rural Portfolio Capital. Rural Portfolio Capital warned the market last Thursday that it had breached its trust deed because it did not have enough money in its escrow account to meet the next dividend on the preference shares. It had 30 days to remedy the breach and at the time said it was confident of doing so. The Herald understands RPI has also been under pressure to repay a loan to South Canterbury Finance.

Under its trust deed RPI was only able to sell its 6.4 per cent stake because the remaining 6.1 per cent is being used as security on the preference shares. The shares are due to be repaid in full by April 15 next year.

Asked if he would hold on to the shares after that Norgate said: "It will depend on what happens with PGG Wrightson over the next 12 months."

There has also been speculation in the market that Pyne Gould Corporation, which owns 18 per cent of Wrightson, may look to sell its stake to enable it to qualify for a banking licence.

Yesterday chief executive Jeff Greenslade said PGC's position on Wrightson was unchanged.

"We remain a committed shareholder."

Wrightson's largest shareholder Chinese company Agria, which owns a 19 per cent stake, would have to go through a takeover offer if it wanted to go above 20 per cent. Wrightson managing director Tim Miles said in October it was not the intention of Agria to take a controlling stake in the business.

Wrightson yesterday closed up 3c on 59c.