PGW - PGG Wrightson

[Dr_Who]

A big increase in opportunity in China thanks to new cornerstone shareholder Agria? A new frontier as PGW marches on with their farm development in Brazil?

SNOOPY

Lets hope they dont march into another part of South America. Stick to the knitting and restructure the current operations with a view to going into China holding hands with new Chinese partner is a far more prudent strategy. PGW venture into south america with blindfolds on is simply a disaster.

If they march into other parts of south america without first having plans to restructure and China, I will DUMP my shares.

[Snoopy]

If they march into other parts of south america without first having plans to restructure and China, I will DUMP my shares.

Time to hit the dump button then Doc. You should have read the fine print in the 'Simplified Disclosure Prospectus'. Have a look on page 50 and check out note (d).

"Brazil farm acquisition - PGG Wrightson has a commitment to settle on a farm purchase in Brazil as part of its strategy of further developing its South American markets. The settlement date is subject to the issue of certain government clearances , which are assumed to have been achieved by the end of January 2010. For the purposes of the Prospective Financial Statements , $0.8m has already been paid this year, with the remaining $13.5 million assumed to be settled in January 2010."

SNOOPY

P.S. I am not too concerned with this tentative PGW Brazilian expansion myself. PGW first leased a small beef finishing farm in Uruguay back in 2001. That was to demonstrate the productivity improvements that could be achieved with new grasses and suitably modified NZ pasture management. It was a kind of proving ground for the Uruguayan seed company that PGW bought into in 1999. It was five years later before NZ Farming Systems Uruguay was set up as an IPO. So if PGW follow that same schedule, it could be 2015 before the floating of "New Zealand Farming System's Brazil" is a reality.

[Doyle]

Time to hit the dump button then Doc. You should have read the fine print in the 'Simplified Disclosure Prospectus'. Have a look on page 50 and check out note (d).

"Brazil farm acquisition - PGG Wrightson has a commitment to settle on a farm purchase in Brazil as part of its strategy of further developing its South American markets. The settlement date is subject to the issue of certain government clearances , which are assumed to have been achieved by the end of January 2010. For the purposes of the Prospective Financial Statements , $0.8m has already been paid this year, with the remaining $13.5 million assumed to be settled in January 2010."

SNOOPY

P.S. I am not too concerned with this tentative PGW Brazilian expansion myself. PGW first leased a small beef finishing farm in Uruguay back in 2001. That was to demonstrate the productivity improvements that could be achieved with new grasses and suitably modified NZ pasture management. It was a kind of proving ground for the Uruguayan seed company that PGW bought into in 1999. It was five years later before NZ Farming Systems Uruguay was set up as an IPO. So if PGW follow that same schedule, it could be 2015 before the floating of "New Zealand Farming System's Brazil" is a reality.

To be fair that was just settlement on a farm thay agreed to buy, before the financial crisis hit. Tim Miles said that given the choice now they may not have purchased the farm, not part of any planned expansion into brazil anyway. More just testing the water for future expansion.

[Dr_Who]

Cheers Snoopy. Didnt see that fine print.

Maybe it is time for me to sell my small holding. Will keep my ELD shareholding instead. Their foray into South America has been a total disaster. I cant see any different in the future.

Every man and their farm dogs in NZ that have gone into South America have been burnt bad, this includes Fonterra.

[Snoopy]

To be fair that was just settlement on a farm thay agreed to buy, before the financial crisis hit. Tim Miles said that given the choice now they may not have purchased the farm, not part of any planned expansion into brazil anyway. More just testing the water for future expansion.

Thanks for that Doyle. I must say it was as big a shock to me as it was to the good Doctor when I saw the expenditure for the Brazilian farm in this years budget. I had heard talk of possible expansion into other South American economies by PGW/NZS but nothing concrete before this.

Still you have to put the expenditure into perspective. There is a projected $185m of long term debt still on the balance sheet after the bail out. Around $15m of that tied up in a Brazilian farm is not going to make or break the company.

How did you find out about Tim Miles attitude to any possible expansion in Brazil Doyle? A quiet word at the AGM? Or was there some press release that I missed?

SNOOPY

[Snoopy]

Their foray into South America has been a total disaster. I cant see any different in the future.

A total disaster?

As far as PGW is concerned they have plugged themselves into a future cashflow from NZS, regardless of the profitability of NZS from year to year via a multi year fund management agreement and a similar farm management agreement. Both of these will be paid in shares which are currently discounted well below net asset value. The appreciation of these shares as farms move into positive cashflow will be another value boost for PGW shareholders in the future. From a PGW shareholder's perspective this all looks rather good doesn't it?

Every man and their farm dogs in NZ that have gone into South America have been burnt bad, this includes Fonterra.

Care to elaborate Doc?

SNOOPY

[Doyle]

Thanks for that Doyle. I must say it was as big a shock to me as it was to the good Doctor when I saw the expenditure for the Brazilian farm in this years budget. I had heard talk of possible expansion into other South American economies by PGW/NZS but nothing concrete before this.

Still you have to put the expenditure into perspective. There is a projected $185m of long term debt still on the balance sheet after the bail out. Around $15m of that tied up in a Brazilian farm is not going to make or break the company.

How did you find out about Tim Miles attitude to any possible expansion in Brazil Doyle? A quiet word at the AGM? Or was there some press release that I missed?

SNOOPY

I tuned in to the tele-conference about the rights issue. Was actually an interesting experience, once I stopped having to listen to some backard idiot from the Timaru Times going on about crafar Farms and the risks of dealing with Chinese people some of the analysts asked questions. And one of them wass what the hell are you doing spending 15 million on a brazilian farm when you are cash strapped? From memory they placed an un-conditional offer on the farm in early 2008 and have been waiting on Brazilian overseas investment approval ever since. Tim Miles said he obviously wouldn't choose to make that offer now but seeing as they are oblidged too will go through with the deal and make the most of it. Was a bit coy about the prospect of selling it, so I wouldn't rule out them selling it at a loss straight away. But seemed more likely from the tone his word selection that they intended to just forge ahead with the farm now they have it.

I'm going off pure memory here, but the basic facts are all correct.

[Balance]

I tuned in to the tele-conference about the rights issue. Was actually an interesting experience, once I stopped having to listen to some backard idiot from the Timaru Times going on about crafar Farms and the risks of dealing with Chinese people some of the analysts asked questions. And one of them wass what the hell are you doing spending 15 million on a brazilian farm when you are cash strapped? From memory they placed an un-conditional offer on the farm in early 2008 and have been waiting on Brazilian overseas investment approval ever since. Tim Miles said he obviously wouldn't choose to make that offer now but seeing as they are oblidged too will go through with the deal and make the most of it. Was a bit coy about the prospect of selling it, so I wouldn't rule out them selling it at a loss straight away. But seemed more likely from the tone his word selection that they intended to just forge ahead with the farm now they have it.

I'm going off pure memory here, but the basic facts are all correct.

All companies in distress have to deal with legacy problems. Luckily for PGW, they now can focus on the underlying businesses with the capital raising out of the way.

The agribusiness sector is strong again and they have a new shareholder with very very deep pockets.

Let's hope Tim Miles is up to the job. Nice guy but he has lived in the shadows of Norgate.

[percy]

i brought a small parcel yesterday at 64c
the brand is strong made up of reid farmers,pyne gould guinness,williams and kettle,fruitfed and wrightsons.
goerge gould did agood job merging pgg with reid farmers so will bring good experience to the board.
the finance section is in tact,the company has now a lot stronger balance sheet.
the south american business makes good sense to me.just as waikato farmers moved to cheaper land in south island pgw will make nz advance farming methods work.
they have been through norgate and now ready to move forward.

[root]

Serious buying going on now, very tempting to sell and take some profit.