KEY POINTS:
PGG Wrightson is unlikely to complete its deal to buy half of meat processor co-operative Silver Fern Farms, says chairman Craig Norgate.
NZX-listed PGG Wrightson had agreed to buy half of Silver Fern Farms for $220 million through a mixture of capital raising and debt.
The deal squeaked through a Silver Fern Farms shareholder vote with 75.6 per cent support, 0.6 per cent above the threshold, with $145 million due in September and $75 million due by March.
However, PGG Wrightson was unable to finalise bank credit approvals in the current financial environment.
Speaking at the company's annual meeting in Christchurch yesterday, Norgate said the transaction was part of a partnership with an objective of enabling farmers to earn better returns from red meat.
"That objective remains in place and we are now working through a number of options to achieve the original outcomes," he said.
"This is taking some time due to the ongoing market volatility and it is fair to say that we are now unlikely to be able to consummate the transaction in its current form within an acceptable timeframe to Silver Fern Farms."
The company reaffirmed its profit guidance of net profit for the current year of between $50 million and $55 million or $46 million to $51 million excluding a performance fee "which represents a further significant step-up in our underlying performance".
PGG Wrightson shares closed up 3c yesterday at $1.62.
Silver Fern Farms chairman Eoin Garden said the co-operative was in constant discussion with PGG Wrightson.
"We are still discussing the opportunities and the options going forward so the issue is not closed in any way, shape or form," Garden said.
Whether a new shareholder vote would be needed depended on the decision by the boards of the two companies.
He said there was absolutely no risk to Silver Fern Farms from the deal not going through.
