PGG Wrightson may need fresh capital

Rural services company PGG Wrightson says it may need new capital after posting a net loss of $66.4 million for the year to June 30, down 190.8 per cent on its profit of $73.2 million last year.

The company earlier this year went to its bankers for a waiver on its potential breach of financial covenants, and yesterday announced that renegotiation of the terms of its loans means it is "also considering the sale of selected assets and a potential equity-raising".

"Any equity-raising is likely to involve both existing shareholders and new investors, and may also include the introduction of a new cornerstone shareholder," chairman Kevin Smith said.

Wrightson has hired First NZ Capital and UBS merchant banks to help in its review and will provide a further update on its plans for meeting the new bank debt.

The company's debt due within one year has jumped to $445.04 million with a further $71.5 million owed for its finance arm (nil last year).

Its renegotiated banking package has allowed $197.9 million debt maturing more than 12 months from June 2009 to be reclassified as term debt.

Bankers have provided a term debt facility for that amount maturing on August 31, 2012, (previously $275 million expiring September 30, 2011).

Its most immediate pressure comes from a loan of $200 million due to be fully repaid by March 31, 2010 - previously $125 million expiring in December 2010 - and working capital of $75 million that matures on August 31, 2011, which was previously due to mature in April 2010.

It has overdraft and guarantee facilities of $40 million, and South Canterbury Finance has agreed to extend its debt to February 2013.

Wrightson blamed some of its bad news on non-trading items, such as fair value adjustments on investments ($50.4 million) and the $49.6 million it paid Silver Fern Farms after bungling a $200 million merger.

Smith said the results were hurt by a $39.21 million writedown in his company's investment in NZ Farming Systems Uruguay (NZFSU).

Its stake of about 11 per cent was worth $50.95 million last year but is now on the books at $12.89 million.

PGG Wrightson's net operating earnings after tax were $30 million and its earnings before interest, tax, depreciation and amortisation (ebitda) $76.7 million.

- NZPA