PGG Wrightson chairman Craig Norgate pictured last year at the announcement of the Silver Fern Farms deal.
PGG Wrightson chairman Craig Norgate pictured last year at the announcement of the Silver Fern Farms deal.
PGG Wrightson and Silver Fern Farms, locked in a dispute over compensation due for last year's failed merger plan, have agreed to start mediation.
A deal last year was to have seen PGG Wrightson (PGW) and Silver Ferns get together, with PGW buying a 50 per cent shareholding in themeat processing co-operative for $220 million.
PGW defaulted on the deal with it failed to come up with a $145 million first instalment, after it had gone unconditional on the merger deal.
Today the two companies said they have appointed retired High Court judge Robert Fisher to act as a mediator.
PGW shares have gone up on the news, and are trading on the NZX up 10 cents at $1.00 each.
Last year's merger proposal was approved by Silver Fern shareholders, and the agreement with PGW became unconditional on 8 September 2008.
PGG Wrightson had planned to fund the $220 million purchase through a mixture of capital-raising and debt.
"PGW has accepted that it was in breach of its agreement, and that Silver Fern Farms justifiably terminated the contract. The issue between the parties now relates solely to compensation for damages caused by PGW's default on the unconditional contract, and the costs of the transaction and costs flowing from the breach," said today's announcement.
PGG Wrightson thinks that around $10 million is suitable compensation for the failed deal, while Silver Fern thinks this should be higher.
The companies say mediation will take place within an "agreed, short timetable".
Mediation outcomes are not binding on either party and relies on them reaching an agreed settlement - set down to happen by April 18.
If it doesn't work out, then there is nothing stopping Silver Fern from starting litigation.
