KEY POINTS:
About a fifth of PGG Wrightson's $78.1 million capital raising was taken up by related party interests who raised the money by selling assets to PGG Wrightson.
The related party money-go-round has to be approved by PGG Wrightson shareholders at a meeting to be held in October or November.
Shares in PGG Wrightson fell 27c to $1.83 on Friday after the company said it sold 43.4 million new shares at $1.80 each, raising a total of $78.1 million.
The sale price was a discount to the $2.10 PGG Wrightson traded at before share sales to institutions and habitual retail investors via a book build.
PGG Wrightson said its subsidiary PGG Wrightson Investments Ltd had acquired 14 million NZ Farming Systems Uruguay (NZS) shares from Rural Portfolio Investments (RPI) and interests associated with Murray Flett for $1.50 per share.
The vendors sold their NZS shares to raise money to buy shares in PGG Wrightson's capital raising to fund its purchase of 50 per cent of meat company Silver Fern Farms. The investors bought about 9.7 million PGG Wrightson shares at $1.80 each, about 22 per cent of the total raised.
RPI is an investment company owned by McConnon and Craig Norgate family interests. Norgate is chairman of PGG Wrightson. Flett is a director of NZS as is Norgate.
Prior to the capital raising RPI owned 30 per cent of PGG Wrightson Ltd and 10 million shares in NZS, which invests in Uruguayan farmland.
PGG Wrightson said it had a policy of maintaining a significant holding in NZS to ensure its interests as the manager of the company are aligned with other shareholders.
The PGG Wrightson equity raising was seen as a difficult exercise because the capital is to help pay for PGG Wrightson's investment in meat company Silver Fern Farms.
The meat industry has a history of poor performance and recent turmoil in financial markets has made capital raising more challenging.
The company's acquisition of a 50 per cent interest in Silver Fern Farms was approved by Silver Fern Farms' shareholders on September 8.
PGG Wrightson said it had been advised the placement was well received, with the shares sold to a range of New Zealand and offshore institutional investors, as well as habitual retail investors in this country.
"PGG Wrightson is very pleased with the support shown by existing and new shareholders in the current volatile market conditions," it said.
The equity placement will be supplemented by a $5000 New Zealand entitlement offer targeting retail shareholders, to be undertaken at the same price - $1.80 per share - as the equity placement.
- NZPA
