PGC flags $30 mln loss on sale of Wrightson stake
by Paul McBeth
Dec. 24 (BusinessDesk) – Pyne Gould Corp., whose finance unit Marac is leading a merger with Southern Cross and Canterbury Building Societies, will book a $30 million loss in the sale of its stake in PGG Wrightson Ltd.
The firm expects to post a net loss of between $31 million and $33 million in the six months ended Dec. 31, most of which comes from the write-down in the sale of its 18.3% share of Wrightson to China-based seed and agricultural research company Agria Corp.
Agria announced its bid this morning. Stripping out costs associated with the Marac merger and government deposit guarantee costs, PGC expects to report underlying earnings of between a $300,000 loss and a $1.7 million profit, compared to a net profit of $10.1 million a year ago.
“This has been a tough transition with hard decisions having to be made to deal with the legacy of the poor property lending decisions of the past,” managing director Jeff Greenslade said in a statement.
“The agreement to sell our stake in PGW marks the end of an era, but continues our strong drive to focus our activities around our core strategy.”
The Marac-led merger, which ultimately seeks to create a listed locally-owned bank with some $2.2 billion of assets, got signed off by the courts last week, having secured buy-in from all three firms’ investors.
The deal is the biggest consolidation in the finance sector from a period of upheaval in which a string of finance companies have failed over the past four years.
PGC still hasn’t decided on the future of its funds management unit Perpetual Group, which includes cornerstone shareholder George Kerr’s distressed asset vehicle Torchlight Management Ltd. Kerr, who owns about 13% of the company, was left out of the mix in the merger deal and won’t be on the board of the new entity.
The shares were unchanged at 37 cents yesterday, and have dropped about 23% this year.