PGG Wrightson shareholders back sale of seeds unit

By Paul McBeth

Oct. 30 (BusinessDesk) - PGG Wrightson shareholders have overwhelmingly backed a deal to sell its seeds unit for $434 million, which will free up cash for a return to investors.

A resolution approving the sale of the seeds division to Danish cooperative DLF Seeds passed with 96.9 percent support at today's combined annual and special meeting in Christchurch. Of the votes cast, about 462.8 million were in favour, 14.7 million opposed and 3.7 million abstained. The New Zealand Shareholders' Association voted against the transaction, saying the short-term gain for investors was offset by the remaining business being half the size and inferior to the seeds unit.

The transaction is still subject to a number of conditions, but if it goes ahead, Wrightson plans to return $292 million to shareholders.

Deputy chair Trevor Burt told shareholders the transaction delivered compelling value to the company and allowed for a continuing relationship with DLF. He said the company is still reviewing the remaining businesses and still has First NZ Capital on retainer to "explore options for PGW's business, growth opportunities, capital and balance sheet requirements and potentially shareholding structure."

Wrightson's cornerstone shareholder Agria Corp owns 50.2 percent of the rural services firm. That stake became problematic when the Overseas Investment Office said it was reviewing the company's 'good character' status due to an ongoing probe by the US Securities and Exchange Commission over the accuracy of disclosures and accusations of share price manipulation.

Agria recognised a provision of US$3.8 million as at June 30 for what it estimates it will have to pay the SEC to settle the probe, including legal costs. In a filing to the SEC earlier this month, Agria said it was cooperating with the US regulator and nearing a potential settlement over claims

"The company has advised the OIO that it will notify it of any settlement with the SEC as soon as the terms are agreed in principle, and it is possible that the OIO may recommence its investigation before any settlement is publicly announced," Agria said in the Oct. 12 filing.

Agria's principal Alan Lai yesterday stepped down as chair of Wrightson, with Joo Hai Lee appointed as interim chair, effective from today. Agria expects to recognise a capital gain of US$92 million from today's transaction.

Burt thanked Lai for his leadership at today's meeting and said the board's make-up and governance will be reviewed in due course.

Wrightson shareholders also approved the re-election of Kean Seang U and Ronald Seah to the board today.

The shares fell 1.7 percent to 57 cents, valuing the company at $190.9 million, less than the proposed capital return.

(BusinessDesk)

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