Silver Fern flags possible exit from Wrightson

Silver Fern flags possible exit from Wrightson stake; stock falls

By Jonathan Underhill

Sept. 16 (BusinessWire) – Silver Fern Farms, the South Island meat company, has given notice that it may sell its holding in PGG Wrightson, raising the prospect that it will choose to exit the investment rather than participate in any Wrightson equity raising.

Wrightson stock fell 2.7% to 71 cents, valuing Silver Fern’s 10 million
shares at $7.1 million. The holding was worth $10 million when Silver Fern got the shares in April as part of the settlement of last year’s failed merger between the two companies.

Since then, Wrightson has hired First NZ Capital and UBS to advise on the sale of assets and potential equity raising, which may include finding a new cornerstone shareholder, according to accompany statement on August 27. The need for additional capital comes after Wrightson renegotiated its bank facilities, bringing forward and increasing the amount of an amortising debt facility to $200 million by March 31.

Silver Fern chairman Eoin Garden declined to comment on the likelihood the shares would be sold or on what decisions the cooperative’s board has already made about the Wrightson stake. The notice of the potential sale “gives us flexibility going forward,” he said. “The board reviews that holding every month.”

Directors of Silver Fern are scheduled to meet again at the end of this month.

The meat processor may not wish to participate in a Wrightson equity raising because its farmers are currently being asked to subscribe to its own issue after they agreed in July to changes in Silver Fern’s capital structure under a plan to raise up to $128 million.

Wrightson Ltd. settled its dispute over the failed alliance with Silver Fern with cash and shares amounting to about NZ$42 million. The agreement ended protracted talks on compensation after Wrightson was unable to settle on its unconditional NZ$220 million agreement to buy a half stake in the meat processor.

At the time, Garden said Silver Fern intended to remain a long-term shareholder of Wrightson.

(BusinessWire)

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