PGW - PGG Wrightson

[biker]

Like airline stock. cyclical. money to be made only with good timing. PGW getting near the bottom of the cycle? May be some money to be made from these levels, depending on the recap.
( only IMHO )

[macduffy]

Farming is about ups and downs. Sharemarkets want up and up.

The two do not mix.

I can't believe that's all there is to it. Plenty of other industries are cyclical but agricultural stocks tend to cycle down .... and out. Maybe it's something to do with being too slow to adapt to changing conditions.

I got out of the old Wrightsons years ago and havn't been tempted back in.

[Dr_Who]

Farming is about ups and downs. Sharemarkets want up and up.

The two do not mix.

Farming is definitely up and down, but incompetent management who fail to plan for the bad times is a completely different story. It just amazes me how many companies fail to plan for the downturn. The parties dont last forever.

[GR8DAY]

.........or maybe, just maybe it's the weather......too wet, too cold, too hot, too dry, too windy, too humid, too many apples?

[upside_umop]

Is the way I see it.

Timing for a recovery in the farming sector will be key. But will it be key for PGW? They have a nice inventory overhang from lower than expected 3rd and 4th quarter sales which they wont be able to unload till next winter given the nature of the products (winter feed etc).

Farmers have really tightened their belts, not just because of lower payouts but because of their sentiment. How would you feel when your asset base had fallen by almost 50% (http://www.stuff.co.nz/dominion-post/business/2868276/Farm-prices-down-by-43pc) in a year? Not good I'd suspect. This is shown in PGW's variance report vs 2008 for both revenue and ebitda.

What about when the recovery happens? I think you'll see banks being a little more cautious with lending to the rural sector as I'd imagine they have been relatively burnt from this fall out recently... 0.8 EBIT coverage was the talk for dairy farmers with 80% debt a few months back. They may be just covering their opex now with increase in dairy payments, but then again, they will have to fork out for fonterra's new capital structure requirements wont they? Or would you expect all fonterra's farmers to buying through RD1?

Interesting times for PGW, especially re capital raising. I'd think it will be relatively dilutionary given PGC have left no mention of PGW in their intended spend up from their equity raising. RPI is no state to participate. Then a 20% cornerstone will raise how much given their market cap? 50 million at current price. But lets be realistic....40 cents? That will give them ~30 million. They need $200 million. 50% of the share register is in doubt. Maybe a 3-1 at 30 cents would entice retail investors. Thats the sort of discount PGC and NPX had...and they've the same investment bankers! Only hope is if they go like FPA and get a decent price. But really, we've already seen what has happened there and the cornerstone will know about it. Ie they will be seeking a good deal, and why not? They have the bargaining power!

Heaps more to say...but I feel I'd get shot down for bagging!

[macduffy]

Hi u u.

I'd hope that all opinions are welcome so go to it!

Besides, I don't think anyone is pretending that it's all roses in the PGW garden at present.
I would have thought that the mergers of regional leading firms over the years that created PGW (Wrightsons, Pyne Gould, Williams and Kettle, etc) would have positioned them in an almost unassailable position in their market. Does anyone have a feel for their market share? Have RD1, Elders etc gained at their expense?

[Tee]

[QUOTE=upside_umop;274893]Is the way I see it.

Interesting times for PGW, especially re capital raising. ....need $200 million. 50% of the share register is in doubt. Maybe a 3-1 at 30 cents would entice retail investors...

I recall that a sum of $78 million was raised by placements with institutional investors, at a price of $1.80 per share. Surely institutions will be approached?

[winner69]

I recall that a sum of $78 million was raised by placements with institutional investors, at a price of $1.80 per share. Surely institutions will be approached?

That was just a year ago eh - probably thought they were getting a great deal as well ... sobeit ..... but do they have long memories

Interesting that that the purpose of that capital raising (Slver Ferns) didn't proceed .... just go into the pot then did it

I take it the retail component of that offer didn't proceed

[winner69]

Only hope is if they go like FPA and get a decent price. But really, we've already seen what has happened there and the cornerstone will know about it. Ie they will be seeking a good deal, and why not? They have the bargaining power!

Heaps more to say...but I feel I'd get shot down for bagging!

Looks like a white knight cornerstone shareholder needed

I'd put my money on that Singapore outfit that took a bit of NZS a while being the hero

And doing something with the finance arm is still a distinct possibility I reckon - maybe sone sort of deal with PGC - let them do the money stuff and PGW do the hard stuff on the land

[macduffy]

I don't think that they will entirely get rid of the finance arm. It's not that long ago that they went back into the business, virtually admitting that the previous sell-off to Rabobank was a mistake and that finance was an integral part of their offering to farmers.

Of course, if they can somehow sell the asset to PGC but remain in the business, possibly as an agent of PGC, that might be a solution.

[kura]

I was reading the annual report today, (Disc: My holding is minimal, due to forgetting about some dividend reinvested, back when I sold all my PGW shares)

My thinking was that it was a fundamentally a sound enough bizz (sure, it has it's ups and downs) but I wanted to rant on about the SFF settlement costs (a fairly significant number)
Summary of situation as I see it (please correct me if I'm wrong)
- Deal signed unconditional without shareholder approval (isn't there supposed to be rules about that ? )
- Banks only through a spanner in the works, (at last minute) due to RPI wanting to sell some of their NZS shares to PGW to cover the proposed PGW rights issue
- Not blaming banks, but directors, as the whole deal hinged on a related party transferring a rapidly depreciating NZS holding into PGW, (Essentially using PGW as their private "piggy bank" )

Most of major shareholders seem "weak" to my thinking
- PGC undertaking a massive rights issue
- RPI must be bordering on insolvency
- SFF wants to sell it's holding

All the ducks that are lining up, are dead ones !

So I can understand why they speak of a new cornerstone investor, none of existing majors are in a position to pour more funds into PGW

I would happily reinvest in PGW, but not with the existing board in control, good bizz, just a pity about the guys in control of it.

[Chinese $ ?]

Buy in gloom-counter cyclical or wait until all the drivers are in accord-yeah right!
In the late 90's when FCL sold the rural company Wrightsons to its own shareholders as a stand alone pubic company the share price was as low as .27c did'nt take long before it rose beyond this.
This currently listed company as per the last annual report is still returning good operating profits.
Once the ambivalence of the PGG inherited mentality disappears and any new cornerstone shareholder/s is introduced bring good management skills and expertise (and money) this company will continue to fly higher.
The foundations of this company go back longer than 100 years it is not about to disappear any time soon.
Buy when people are selling- sell when people are buying.
What an opportunity at these price levels with an eye to the future!

[Snoopy]

Buy in gloom-counter cyclical or wait until all the drivers are in accord-yeah right!
In the late 90's when FCL sold the rural company Wrightsons to its own shareholders as a stand alone pubic company the share price was as low as .27c did'nt take long before it rose beyond this.
This currently listed company as per the last annual report is still returning good operating profits.
Once the ambivalence of the PGG inherited mentality disappears and any new cornerstone shareholder/s is introduced bring good management skills and expertise (and money) this company will continue to fly higher.
The foundations of this company go back longer than 100 years it is not about to disappear any time soon.
Buy when people are selling- sell when people are buying.
What an opportunity at these price levels with an eye to the future!


I agree with all of your comments Chinese $. Things must have reached rock bottom when a $25m debt as part of the Kramer (sp?) farm receivership is declared and the PGW share price goes up!

The unknown, and it is a big one, is how many PGW shares will there be in the future to share those profits? There has been talk of a 1:1 rights issue at 50c, but the PGW share price was much higher then. So what about a 2:1 rights issue at 30c? Or a 5:1 rights issue at 10c? And who is going to underwrite the share issue?

I have set aside money to support the capital raising by PGW already. But I won't be buying any until I know the issue terms...

SNOOPY

discl: hold PGW

[Misc]

GPG are probably lining this up ,,, imo. At firesale prices ofcourse , merge it with Turners and Growers and add in Scales Corporation lifted from the carcass of SCF ... again at firesale price and you have a mega Agri-Biz ready to relist in a couple of years controlling a large % of the NZ primary industry services market.

M

[srotherh]

GPG are probably lining this up ,,, imo. At firesale prices ofcourse , merge it with Turners and Growers and add in Scales Corporation lifted from the carcass of SCF ... again at firesale price and you have a mega Agri-Biz ready to relist in a couple of years controlling a large % of the NZ primary industry services market.

M



Brilliant idea !!!

[macduffy]

GPG are probably lining this up ,,, imo. At firesale prices ofcourse , merge it with Turners and Growers and add in Scales Corporation lifted from the carcass of SCF ... again at firesale price and you have a mega Agri-Biz ready to relist in a couple of years controlling a large % of the NZ primary industry services market.

M

An interesting thought, Misc.

But I wonder if GPG still have the will to take on a project such as that or whether they are concentrating on getting Coats up to speed for a sale/IPO to enable them to get back on track with Ron's programme to wind up and liquidate?

:confused:

[Dr_Who]

I think GPG has too much on their own plates to worry about.

[whatsup]

I think GPG has too much on their own plates to worry about.

TUA hasnt exactally been a glowing example of GPG applying their reorganising skills and seeing the subject companies share price take off!

[duncan macgregor]

Tonights news states that westpac and wrightsons are caught out with the $200 million in debt dairy farm bankrupsy. Wonder how much will reflect back to the bottom line after the mortgagee sale. Largest dairy farm business in NZ gone under must hit the PGW SP sooner rather than later. Macdunk

[whatsup]

Duncan old news!!!

[Misc]

Old news of the secured debt maybe ... but what is the extent of the unsecured exposure for farm supplies and services provided by PGW here? A NZX disclosure should have been made by now imo.

M

[Snoopy]

Old news of the secured debt maybe ... but what is the extent of the unsecured exposure for farm supplies and services provided by PGW here? A NZX disclosure should have been made by now imo.

M

The PGW Finance Exposure to Krafer (sp?) farms is $25m. That figure has already come out in the media. There are 315m PGW shares out there. So $25 represents 0.8c per share. Not good news, but not exactly a company breaker either.

Of course bankruptcy doesn't mean that $25m is lost. It may just take a while to get the money back and PGW may not get all the money back, depending on what happens with the farm sales.

There is a provision in the accounts already for $3.627m of doubtful debt finance receivables and $3.02m doubtful debt 'other' receivables. Net overall receivables were $156.1m at balance date, down from $210.8m in the previous year. More than likely PGW supplies will take a hit, but how much is already provided for in those bad debt provisions remains to be seen.

SNOOPY

[Dr_Who]

Looks like PGW For Sale sign is up.

Maybe the Chinese can pick this one up for cheap?


Why would the Chinese want to buy a NZ based rural servicing company employing thousands of people? Resources or brands - that's what the Chinese are looking for.

PGW is now in deep deep financial strife. Banks have given the company until 31 March 2010 to repay $200m.


Announcement... Chinese interest

[Balance]

Announcement... Chinese interest

Very positive for PGC who has 20% of PGW.

PGC will probably now sell to the Chinese.

Glad the Chinese are prepared to take on PGW. Good one!

[Dr_Who]

One of the condition is PGW have to raise $200m to cover debt.

I suppose no rush to buy yet.

[bung5]

This is becoming to common. Leveraged this up a week ago just the same as did with FPA and Nuplex. Sell executed.

[stone small green]

sold all mine at 0.88..
Pgw doesn't follow the trend, that's why i'm not happy.

[Doyle]

The mere fact that someones willing to do a placement at 88 cents, suggests that the cap raising could go well. This is great great news. But agree no real hurry.

Discl: Hold PGW

[stone small green]

i think the price will go down to about 75s. or might be further,
no good following the rush

[Doyle]

This changes the whole fundementals though. All of a sudden a 1 for 1 right issue at 50 cents looks completely plausible, maybe they can even get a good placement going and only have to supplement it with a 1 for 3 at 60 cents. This announcement makes a cap raising look completely acheivable, where as halfway through the PGC raising I was really starting to doubt PGW's ability to raise capital. The only major hurdle left is that RPI is porbably bordering on incolvency, judging from the rpc announcement out today. My guess is RPI is looking for a buyer for its NZS shares (Agria again???) and will capitalise its losses there in order to take part in any cap raising

[beacon]

9m sold today SFF or RPI or ?? Either way, weaker holders happy to quit at a reasonable price, and new comers happy to come in at a reasonable price. WIN WIN for big fish. lose lose for recent sellers...

[beacon]

Rights may be priced around 50c now at 1:2

[Dr_Who]

9m sold today SFF or RPI or ?? Either way, weaker holders happy to quit at a reasonable price, and new comers happy to come in at a reasonable price. WIN WIN for big fish. lose lose for recent sellers...

Silver ferns sold out

[beacon]

Cheers Dr Who

[Balance]

This should get some of the punters thinking twice about PGW?

http://www.stuff.co.nz/business/2975279/Wrightsons-new-shareholder-under-fire-in-US

Many a twist and turn to come yet.

[winner69]

Bloody uninformed press ... its all speculation

PGG must be getting sick and tired with this continual beat up by the press ..... totally unwarranted .... I wonder ehy they continue

Anyway -

http://www.nbr.co.nz/article/pgg-wrightson-knew-legal-action-against-agria-113613

[Doyle]

Any idea what was behind the sudden price drop today? I realise the nzx50 was down but why PGW singled out for extra punishment?

[winner69]

Any idea what was behind the sudden price drop today? I realise the nzx50 was down but why PGW singled out for extra punishment?

Still a lot hogher than few weeks ago ... maybe it overshot the reasonable price end of last week in the excitment of an announcement

[biker]

Any idea what was behind the sudden price drop today? I realise the nzx50 was down but why PGW singled out for extra punishment?

Possibly a few bailouts when PGC came out and denied press reports that they have said they will put more money into PGW. Don't know why they bothered, but I guess it covers those people who believe everything they read from columnists in the paper.

NZX Announcement relating to The Press and Dominion Post Articles
In the articles entitled “Still unclear if Agria will stump up with more cash” and “Unclear if Agria
will stump up with more cash” published in Wednesday, 21 October 2009 editions of The Press
and Dominion Post, respectively, it was reported that Pyne Gould Corporation Limited (PGC)
has indicated it will put more money into PGG Wrightson Limited through a proposed PGG
Wrightson Limited rights issue. This statement is not correct.
No decision has been made by the Board of PGC as to whether the Company will participate
in any capital raising to be made by PGG Wrightson Limited. No details of a proposed PGG
Wrightson Limited capital raising have been released and the Board does not have sufficient
information to make that decision. Any decision for PGC to participate (either fully or partially)
or not to participate in any capital raising by PGG Wrightson can only be taken once the full
details of any proposed capital raising by PGG Wrightson Limited are known, and then, any
decision will only be taken in the best interests of PGC.
Colin Hair
Company Secretary
10789031


I still think PGC will contribute something to a rights issue, unless they do some other deal involving Wrightson finance.
Article in the ODT speculating on a 2 for 3 at 50c.
Nice to see a higher than expected uptake of PGC rights. Bookbuild to come.
Still a bit of dust in the air.

[Misc]

Xenophobia perhaps?? I seriously doubt Kerr and Co will like this arrangement with Agria .. they are too 'old school' .... even if it has helped their SP short term. So perhaps they have written off PGW??


M

[biker]

Xenophobia perhaps?? I seriously doubt Kerr and Co will like this arrangement with Agria .. they are too 'old school' .... even if it has helped their SP short term. So perhaps they have written off PGW??


M

Doubt it. The chance to buy more PGW at a discount may be too hard to resist. It will be interesting to see the Board/corporate shake up at PGC post the capital raising.

[beacon]

Doubt shakes the weaker holders. Then there can be an encore of PGC. maybe?
But also that fools rush in where angels fear to tread... maybe?

In the interim, the following are noteworthy :
- small volumes for today's negative price action,
- PGW remains the biggest farm services and supply company in NZ,
- agriculture will make a comeback ... with a vengeance,
- NZ remains primarily an agrarian economy.

[Balance]

PGC has capital now to play with. It can choose to invest in PGW or it can choose to sell - maybe to Agria.

Perfectly reasonable stance for the PGC board to make.

Also, forget about the existing boards - it will be very surprising if there's no big changes made at both PGW and PGC.

A new broom sweeps clean.

[winner69]

Gaynor not very happy with Agria .... and he's a shareholder
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10605033&pnum=0

Obviously doen't think too much for Chairman Smith - Smith seems a rather unlucky fella

These concerns gathered momentum because PGG Wrightson, and its related party companies, have made a huge number of blunders in recent years and board governance has been particularly weak.

In addition Keith Smith, PGG Wrightson's chairman, has been involved in a large number of disastrous overseas transactions.

He was chairman of The Warehouse and Tourism Holdings when they went into Australia and is chairman of the poorly performing NZ Farming Systems Uruguay.

[kizame]

Brian Gaynor would be one of the very few whose opinion I trust out there in money land.
Totally like that guy.

I think directors should have to qualify to be on boards by going to some form of directors school,where they are taught proper etiquette in dealing with company business and their shareholders,some of the goons out there i.e feltex,can have their disasters lose everybodies money and still be directors. Money land needs a stronger hand than Mark Weldon.

[winner69]

Even Rod Oram is worried about this Agria deal ... and the inconsistency in what Chairman Smith and what CEO are saying what the deal isall about must be a worry

http://www.stuff.co.nz/business/2997980/China-venture-fraught-with-peril

[whatsup]

Even Rod Oram is worried about this Agria deal ... and the inconsistency in what Chairman Smith and what CEO are saying what the deal isall about must be a worry

http://www.stuff.co.nz/business/2997980/China-venture-fraught-with-peril

Looks like to me that they were/are scraping the bottom of the barrel in this "one" !!!

[Dr_Who]

PGW sp down 7.5% today.

Is the market telling us something we dont know?

[winner69]

PGW sp down 7.5% today.

Is the market telling us something we dont know?

.... to 63 cents .... prob a 50 cents rights issue coming up sooner than we thought eh

Long way off the price it spiked after the chinese announcement eh

[Doyle]

Its taken a battering since last week and I'd love to know why. Seems like everyone is suddenly unhappy with having agria in the mix. While agria does seem somewhat questionable, the fact some is paying 88cents for the shares has to be a good thing. Yet the shares are now trading at the same level they were before the announcement. In fact the day before the announcement they were 65 cents after some somewhat dubious(possibly insider) trading. So in short maybe the market is telling us something we don't know I can't think of another plausible reason.

[macduffy]

It's just that the market has had time to evaluate the Agria business; the fact that it's not a very substantial company; the conditional nature of the offer to buy in; the overall (temporary?) weakness in the market generally.

I doubt that there's anything more to it than that but then I don't hold PGW.

[whatsup]

It's just that the market has had time to evaluate the Agria business; the fact that it's not a very substantial company; the conditional nature of the offer to buy in; the overall (temporary?) weakness in the market generally.

I doubt that there's anything more to it than that but then I don't hold PGW.

Add to that, imho that every "move" that the directors have made in recent history seems to have been the wrong one!!!!

[Dr_Who]

.... to 63 cents .... prob a 50 cents rights issue coming up sooner than we thought eh

Long way off the price it spiked after the chinese announcement eh

Me think you maybe right. I would assume the rights price may have to be lower than 50 cents. Maybe 40 cents?

How will Norgate and friends pay for their share in the cap raising?

It is scary to think PGW will venture into China. China is a much harder place to do business than South America. I hope they make board changes and bring back some confidence in the marketplace. I would be interested in participating in PGW during the rights if they make changes with good transparency. Give us direction of their future plans.

As Whatsup says... every move in history have been long and wrong. Track record have not been good.

[rabcat]

Agree that PGW have made a lot of mistakes in recent times and they need some changes at board level.
But what does it matter about Agria? As far as i understand the Agria money $37m is in this country.
The bottom line is PGW need to raise $200m so PGW need another $160m from their rights issue?
PGW are not buying Agria, it is Agria that is buying into PGW.
Remember PGW has over a billion in assets and is trading at a market value of less than $200m ! They also made a good operating profit in the last 12 months. The overall loss was related to those bad decisions by the board on SFF and right downs on NZ farming systems.

[AMR]

Still worth a shot I reckon. Nearing the March lows again at 59c, will it hold this time?

If there was something I have learned from the financial crisis, it is not to "hate" a company for fundamental bungling.

I remember when PRC was getting bagged daily on here...and then proceeded to double on 2 months.

[winner69]

Remember PGW has over a billion in assets and is trading at a market value of less than $200m !

and remember they have $1.2 billion in liabilities as well

Annual accounts say net tangible assets are $60 million .... 19 cents a share

makes a market cap of $200m look good ..... no wonder they need another $200m plus in new capital

[RazorX]

Dang. This was the second company I bought into - at 71 cents. The next week it dropped below 68 and well after that it hit 60.

I'm wondering whether I should have sold in the last big rise, cause its gone all the way back down - 62 cents today. Maybe not one of my smartest moves.

[whatsup]

Agree that PGW have made a lot of mistakes in recent times and they need some changes at board level.
But what does it matter about Agria? As far as i understand the Agria money $37m is in this country.
The bottom line is PGW need to raise $200m so PGW need another $160m from their rights issue?
PGW are not buying Agria, it is Agria that is buying into PGW.
Remember PGW has over a billion in assets and is trading at a market value of less than $200m ! They also made a good operating profit in the last 12 months. The overall loss was related to those bad decisions by the board on SFF and right downs on NZ farming systems.

Yes but RAB>>> ( new member - could be from inside PGW ! ??) whats the "quality " of those assets ( IMHO after they have been loaded with debt ? )

[rabcat]

Not an insider. Just a shareholder! and my name is not Craig.

As for the quality of there businesses i do think they are good. But corporate goverance has been poor. I do expect them to bounce back

[flyingfox]

I dont understand someone always saying not going to buy PGW or PGC, went through the numbers and can't see anything worth to buy.....
so why you are always here??If I'm not interested in a company I just simply ignore it....
PGC's directors increasing shareholding, does it tell something?

[macduffy]

I dont understand someone always saying not going to buy PGW or PGC, went through the numbers and can't see anything worth to buy.....
so why you are always here??If I'm not interested in a company I just simply ignore it....
PGC's directors increasing shareholding, does it tell something?

.....because this is a forum for discussion and we want all opinions. (Had to say that because I sometimes criticise companies too!)

I've held PGG - or at least the old Wrightsons ( and Wright Stephensons/ Challenge Corp/Fletcher Challenge ) and I'm still interested in the company. Might be tempted back yet!

;)

[beacon]

I'm still interested in the company. Might be tempted back yet!

;)

That time too will be here soon mate! Best of luck and good investing ...

[stone small green]

IT seemed the AGG turned out to be good, yesterday.
did anyone went?

with respect to raising another $200m.

they only have right issue and selling asset left.

I'm still curious about how the partnership with Agria will turn out to be like

[Nevl]

At the end of the day Agria is putting in $36mill. Thats it. If there are problems with them thats fine. But as long as PGW get the money. Hopefully they can provide contacts in China and all the rest of it but if not the money is the important part.

[flyingfox]

before capital raising probably the price will have no surprise because potential buyers think they could buy cheaper then.

I have no doubt the worst time of the company is the best time to buy shares,but still risky, biggest question mark is about the management/directors.

[flyingfox]

anyone have an idea when pgw going to have the capital raising?
this month?
i want to take the offer if it's 50c, 2 for 3. but not sure about it yet...
not much trades , is everyone waiting for it?

[RazorX]

Apparently it was going to be Early this month. There was talk of a 1 for 1 rights issue. It will be interesting. If its 50c I think I'll take it up. Above that I'm not sure.

BTW I have never had a rights issue on my shares before - is there brokerage fees involved? Also can we pay via Bank transfer? I don't have a cheque book so if they require a cheque to be sent in I'm stuffed. (Unless I be really nice to a friend lol)

[meesham]

BTW I have never had a rights issue on my shares before - is there brokerage fees involved? Also can we pay via Bank transfer? I don't have a cheque book so if they require a cheque to be sent in I'm stuffed. (Unless I be really nice to a friend lol)

There's no brokerage, but you usually have to pay by cheque. If you don't have a cheque book you could always get a banker's cheque, it usually costs about $5.

[Doyle]

Apparently should be a cap raising announcement by the end of next week. But I wouldn't be suprised if its later. Tim Miles said there would probably be an announcement regarding capital raising within two weeks at the AGM. It took more like 6 before they announced the agria deal. So if they are true to form may not be until the end of the month.

Although I suspect alot want to buy, its just too risky until the details of the cap raising are announced. 2 for 3 at 50 cents would raise around 120 million which would leave them a little short. The only obvious asset that is non-core now is NZS and the SP is so low its probably not worth selling it.

I'm guessing it will more likely take the form of a big placement than a rights offer. RPI simply can't partake in a cap raising of this size, so it would have to sell down something to take part (Maybe NZS).

Either way should be interesting.

DISCL: Hold PGW and NZS.

[flyingfox]

2 for 3 only raise 120m?Anyone dont want to take the offer should sold off now, what r they still waiting for?

[Nevl]

Apparently should be a cap raising announcement by the end of next week. But I wouldn't be suprised if its later. Tim Miles said there would probably be an announcement regarding capital raising within two weeks at the AGM. It took more like 6 before they announced the agria deal. So if they are true to form may not be until the end of the month.

Although I suspect alot want to buy, its just too risky until the details of the cap raising are announced. 2 for 3 at 50 cents would raise around 120 million which would leave them a little short. The only obvious asset that is non-core now is NZS and the SP is so low its probably not worth selling it.

I'm guessing it will more likely take the form of a big placement than a rights offer. RPI simply can't partake in a cap raising of this size, so it would have to sell down something to take part (Maybe NZS).

Either way should be interesting.

DISCL: Hold PGW and NZS.

A 1for 1 at 50c would i think raise enough to take the pressure off them. By getting $100mill and then negotiating to roll over the rest of the debt would see them right I think.They generally have a pretty good cashflow from the business and as has being pointed out they stuffed up due to overconfident management. The recent rise in dairy prices will help though hopefully the Kiwi $ will drop a bit as well.

[Doyle]

Its estimated they need $200 mil to repay debt by march.
agria has put up $36mil.

After agria is issued with shares around 355 million shares on issue.
If rights are exercised at 50 cents on a 2 for 3 basis. That will raise $118.4 million.
That still leaves them $46 million short.

1 for 1 at 50 cents will raise 177.5 million. giving tham about 10 million more than they need.

Which leaves the final problem whatever for the rights issue takes who is going to underwrite it when the largest shareholder (RPI) can't afford to take up their rights.

Thats why I think it will have to have a large placement as part of the deal.

Discl: Hold PGW

[Nevl]

Its estimated they need $200 mil to repay debt by march.
agria has put up $36mil.

After agria is issued with shares around 355 million shares on issue.
If rights are exercised at 50 cents on a 2 for 3 basis. That will raise $118.4 million.
That still leaves them $46 million short.

1 for 1 at 50 cents will raise 177.5 million. giving tham about 10 million more than they need.

Which leaves the final problem whatever for the rights issue takes who is going to underwrite it when the largest shareholder (RPI) can't afford to take up their rights.

Thats why I think it will have to have a large placement as part of the deal.

Discl: Hold PGW

No underwriting is too expensive. Make the issue renouncible so RPI can sell their rights even for 10cent each and see what they get. A Bond issue for the rest can take care of the banks if they end up short. But they need to show some smarts and show that they know what they are doing. If the banks wont play then pay them off and find a better way of doing it. PGW are a good business and once they clear some of their debt will be in a very nce position.

[Doyle]

No underwriting is too expensive. Make the issue renouncible so RPI can sell their rights even for 10cent each and see what they get. A Bond issue for the rest can take care of the banks if they end up short. But they need to show some smarts and show that they know what they are doing. If the banks wont play then pay them off and find a better way of doing it. PGW are a good business and once they clear some of their debt will be in a very nce position.

I do agree, but unfortunately underwriting is part of the deal with agria. No underwriting=no argria. Unless they get a waiver.

[flyingfox]

No underwriting is too expensive. Make the issue renouncible so RPI can sell their rights even for 10cent each and see what they get. A Bond issue for the rest can take care of the banks if they end up short. But they need to show some smarts and show that they know what they are doing. If the banks wont play then pay them off and find a better way of doing it. PGW are a good business and once they clear some of their debt will be in a very nce position.

Agree, i don't believe agria is that silly to pay 88c per share to buy into a rubbish company, they will participate in the capital raising as well I guess.

[Doyle]

Morningstar updated PGW as a hold. They think PGW will raise 50 mil out of working capital, so think they need another 120 million.

so
2 for 3 at 50cents?

[Nevl]

Be interesting to see what cashflow they have. If they are generating a good amount of free cash then the needs of the rights issue will be lower. If they announce anything less than 1 for 1 at 50cents then I expect to see a good jump in the price. After all they have a big turnover and if they manage cash correctly they could free up a lot of cash along with the Agria money. I think they will look at raising about $120mill plus the Agria cash. That should be enuf.

[Anna Naum]

Fonterra increasing payout for 2010 to $6.10 a kilogram (from $5.10) has to be good for PGW?

[Doyle]

http://www.stuff.co.nz/business/market-data/3047448/Largest-shareholders-quiet-on-PGGW-capital-raising

Amazing how its possible to produce an article with no new information what so ever.

[Jaa]

LOL Doyle, thought the same thing reading it.

My take is that PGW are playing for time to see how much cash they can generate from their operations to keep the capital raising as small as possible.

This is in the best interests of the 2 main shareholders to ensure they get diluted as little as possible and/or gives them time to find the money in an improving economy.

The Agria investment is part of this strategy to ensure RPI and PGC maintain control after the dilution.

[flyingfox]

doubting shareholders probably want to sell after reading this...
who knows why, it's just not make sense to me becasue thr's nothing new, exactly

[rabcat]

Interesting article. Neither RPI or PGC will comment as they are not part of the capital raising. As I understand it from the Annual meeting only the independant directors know the details of the proposed capital raising.
Apparently Craig Norgate stepped down as chairman not because of the SFF stuff up but to ensure the chairman was an independant director for the capital raising.

PGC indicated in their own capital raising documents that they " expect to have the financial capacity to participate in any potential capital raising by PGW". PGC also need to be careful that they do not get too diluted otherwise they would have to revalue there stake in PGW downward by many millions.
So my guess is that they will take up their allocation what ever it is.

Also I thought when Brad McConnon talked at the Annual meeting he had a lot of faith in PGW and that the company had a good future. And those south Island investors seem to have a lot of money to invest. If McConnon family dont have enough money one of his southern mates will probably help him out.

[bung5]

Expecting the capital raising announcement this week , should see the share price climb back up.

[Doyle]

Expecting the capital raising announcement this week , should see the share price climb back up.

Or see it death spiral downwards. Either way will be a very exciting week, wish they would just bloody get on with it. First it was in the first two weeks of november then it was early november. Now we are in the second half of november and still no news. The fact that it always takes the board far longer than announced doesn't exactly inspire confidence.

Discl: Hold far to much PGW

[flyingfox]

death sprial downward?u mean after the initial dilution?
what could be the reason for that?shareholders want to sell below their average price ?so why should they still participate the capital raising?

But i do agree anything could happen in stock market...

[Doyle]

death sprial downward?u mean after the initial dilution?
what could be the reason for that?shareholders want to sell below their average price ?so why should they still participate the capital raising?

But i do agree anything could happen in stock market...

I personally think that it will be a good month for PGW. But the have to get underwriting, underwriters may end up insisting on something like 2 for one at 30 cents. Meanwhile RPI either sells down its stake to fund a rights purchase or sells its rights. Consequently the share or rights price plummets. Hence downward death spiral I speak of.

More likely scenario: Rights issue of say 1 for 2 at 60 cents supplemented by placement. RPI finds money through McConnon family and takes up its rights as does PGC who despite insisting they havn't made up their mind will take up the rights because they think its a bargain. Hence share price takes off and hits $1 by January.

Discl: Hold PGW

[Doyle]

SP rallying strongly this week, some people in the know about cap raising? I wonder. If this keeps up much longer, I'd expect a please explain letter from NZX.

[biker]

2 for 3 at 50c ?

[bung5]

Yeah I would not be surprised to see the capital raising announcement tommorow or thrusday. Similar activity before the agria placement as well...

[flyingfox]

excited!anyone see on NZX this morning about the more depatures from board?
Is that good news or bad news?or maybe not news at all

[bung5]

excited!anyone see on NZX this morning about the more depatures from board?
Is that good news or bad news?or maybe not news at all

Don't think that was NZX announcement more likley media speculation as always.. very likley to be correct thou.

I'm more than happy for the the board to roll heads

[Doyle]

http://www.stuff.co.nz/business/market-data/3073688/Norgates-RPC-raises-2-1m-in-dividend-funds

Norgate raised the money to pay RPI's debt holders divedends.

[beacon]

Two horses bolted...

[beacon]

Or is it three now... the stable is looking empty. Time to close the stable doors on bad news yet?

[Doyle]

Looks like we will have to wait till next week for a cap raising announcement. So much for first two weeks of November.

[bung5]

Does not leave me with much confidence in the board. I thought for once they would stick to what they have been telling us.

[flyingfox]

After cap raising maybe I just assume lent money to a bankrupted frd,and look back after couple of months ,will be a big surprise then-either good or bad

[flyingfox]

bet things will only get better after worst time..

[rabcat]

Looks like we will have to wait till next week for a cap raising announcement. So much for first two weeks of November.

Maybe we miss heard them and they meant early December or maybe there is no one out there willing to underwrite the offer! :(
Perhaps they could issue an update on when there is likely to be an announcement

Discloser: Own too many PGW.

[Anna Naum]

Announcement tomorrow or Monday

[root]

Announcement tomorrow or Monday
Is that an educated guess Anna?

[Snoopy]

Announcement tomorrow or Monday


If the capital raising plans are unfavourable they will be announced on Friday after the market closes. If there is 'good news' (less capital sought than expected on favourable terms), it will be announced on Monday morning before the market opens. That is usually how these things work ;-P

SNOOPY

[root]

Thanks for the insight Snoopy, ......I'll be hoping for Monday then.

[Xerof]

I'd say it 's tomorrow.......

[Balance]

If the capital raising plans are unfavourable they will be announced on Friday after the market closes. If there is 'good news' (less capital sought than expected on favourable terms), it will be announced on Monday morning before the market opens. That is usually how these things work ;-P

SNOOPY

Maybe, maybe not.

Last announcement by PGW was 16 Oct, Friday and the sp rocketed.

NPX announcement was also on a Friday.

Case of allowing the market and media time to digest news over the weekend.

If it's after-market close on Friday, then watch out!

[Anna Naum]

Is that an educated guess Anna?

Not that educated ....but I hear the drums rumbling with Investment Bankers

[Anna Naum]

PGG Wrightson's big day beckons
Duncan Bridgeman | Friday November 20 2009 - 08:00am
PGG Wrightson will announce its capital raising plan today, investment banking sources told NBR last night.

At the annual meeting last month the company had said an announcement would be in early November.

The company is tied to a new banking facility that requires payment of $200 million by March next year after the balance sheet was torn apart by writedowns relating to Silver Fern Farms and its investment in subsidiary company NZ Farming Systems Uruguay.

The shares – worth nearly $3 a year ago – closed last night at 69c.

Market expectations are that the company needs to raise anywhere between $120 million and $150 million as well as the $36 million from a 13% share sale to Chinese company Agria.

The structure of the capital raising could include a discounted rights issue, share purchase plan and a delayed performance fee from New Zealand Farming Systems Uruguay.

A boardroom clean out is expected to follow the capital raising.

[Nevl]

9 for 8 at 45c. looking at raising 180 mil. Well that pays off all the bills. Will be taking up my allocation.

[flyingfox]

45 cents?is that true or guess?

[meesham]

45 cents?is that true or guess?

$180,688,530.60 to be raised with 401,530,068 securities to be issued works out to 45cents.

[Nevl]

Got it from this announcment

APPNDX7: PGW: Renounceable Rights Issue/Notice Event Affecting Securities

20 Nov 2009 8:30 am

PGW 20/11/2009 APPNDX7

REL: 0830 HRS PGG Wrightson Limited

APPNDX7: PGW: Renounceable Rights Issue/Notice Event Affecting Securities

Nature of event: Rights Issue Renouncable

EXISTING securities affected by this Description of the class of securities: Fully paid ordinary shares

ISIN: NZCYTE0002S9

Number of Securities to be issued following event: 401,530,068

Minimum Entitlement: N/A

Ratio: 9 for 8 Treatment of Fractions: Rounded down to nearest whole number

Payable or Exercise Date: 16 December 2009

Strike price per security for any issue in lieu or date Strike Price available: N/A

Amount per security: $0.45 Currency: NZD Total monies: $180,688,530.60

Record date: 26 November 2009 Notice Date: 27 November 2009 Application date: 16 December 2009 Allotment Date: 23 December 2009 End CA:00187990 For:PGW Type:APPNDX7 Time:2009-11-20:08:30:11

More announcements for PGW

[bung5]

boooya going to a lot of action after lunch!

[rabcat]

:rolleyes:Yes 9 fpr 8 at 45 cents has been announced. Briefing at 12 noon you can dial into. On NZX.:rolleyes:

[Nevl]

Seems funny that they made this announcement then the next announcement is about telling the media at 12:00. maybe this was just a slip but it seems to be ok and a good price.

[Doyle]

If it was a guess its pretty amazing. Because its true.

[Doyle]

Reasonably dilutionary, what do they need the extra money for? 180 + working capital + agria should be 250 mil at least if cash flows good. I will take up mine to but hard to see SP direction for today i'm guessing in range 65-70 cents. Others thoughts?

[bung5]

Reasonably dilutionary, what do they need the extra money for? 180 + working capital + agria should be 250 mil at least if cash flows good. I will take up mine to but hard to see SP direction for today i'm guessing in range 65-70 cents. Others thoughts?


would of thought it will be up alot higher than that

[Xerof]

The money is to pay off their bankers a portion of the debt mountain......

[Doyle]

I realise that, I meant PGW reportedly need 200 million. If cashflows have been good thus far this year they will probably have in excess of 250 million. What the extra 50+Mil for? Pay down more debt or expansion into china? that will be whats interesting in the announcement. That and whether Norgate will take up his rights. PGC WILL.

[Xerof]

to recapitalise the finance coy, or Uruguay

they have had an annus horribilus, so if you are going to the market with cap in hand, may as well make it worthwhile, and sort the ships out in one visit

just my opinion, no hard evidence

[Doyle]

to recapitalise the finance coy, or Uruguay

they have had an annus horribilus, so if you are going to the market with cap in hand, may as well make it worthwhile, and sort the ships out in one visit

just my opinion, no hard evidence

I'D say thats a good call on the finance company, they did say its now going to be more important than ever, and I've noticed a distinct lack of bad debts for PGW over the last few years. One would have thought they would have to suffer a little over the financial crisis. Farmers cashflows have been week and Crafar farms alone could potentially soak up alot of bad debts. I hate to think how much was receivable from them largely unsecured for equipment and supplies?

[Dr_Who]

How will RPI pay for the rights?

PGC coming to the rescue?

[Doyle]

Some extra money through McConnon family, Norgate selling his house, raiding the Kids trust funds etc. Or maybe Norgate has found a buyer for some of his current shares (Agria?) and will use the money to help take up the rights on remaining shares. 50 Million Is alot of money to find mind you and maybe he simply plans to sell the rights.

IMO he will have found a way to take up the rights without having to much dillution. He seems pretty committed to PGW and I don't think he could walk away from it now even if he wanted too.

[Doyle]

Anyone know what it costs to listen into the teleconference?

[Doyle]

RPI will sell most its rights, PGC will take up all theirs. In the disclosure statement.

[Doyle]

Not on market though most them will go to agria at a price already set, and some to institution through a bookbuild between them and RPI.

[flyingfox]

u mean agria going to take RPI's place?they're not only seeking 13%?

[winner69]

Anyone know what it costs to listen into the teleconference?

Those 083035 numbers are free for those who dial in ... don't know if they vet callers

[flyingfox]

BEIJING -- (Marketwire) -- 11/19/09 -- Agria Corporation (NYSE: GRO) (the "Company" or "Agria"), today announced its intention to participate in PGG Wrightson's (NZX ticker PGW) fully underwritten pro rata renounceable rights issue.

PGG Wrightson announced today its intention to raise NZ$180.7 million through a fully underwritten pro rata renounceable rights issue. PGG Wrightson's shareholders will be entitled to subscribe for nine new shares for every eight shares held by such shareholders on the record date of November 26, 2009. The issue price for the new shares is NZ$0.45 per share. A Simplified Disclosure Prospectus for the issue has been registered by PGG Wrightson with the New Zealand Companies Office and is available on its company's website www.pggwrightson.co.nz. Copies of the prospectus will be mailed to eligible PGG Wrightson shareholders from November 27, 2009 to November 30, 2009.

Agria will be eligible to participate in the rights issue with respect to the 41.1 million shares it will receive by way of the placement announced on October 16, 2009, which will entitle Agria to subscribe for 46.2 million shares in the rights offer at an aggregate price of NZ$20.8 million.

The share issue and related agreements will result in a realignment of shareholdings between PGG Wrightson's existing cornerstone shareholders, Rural Portfolio Investments Limited (RPI) and Pyne Gould Corporation Limited (PGC), and Agria.

RPI currently has a shareholding of 27.5 percent and has undertaken to sell to Agria 56.8 million of the rights due to it under the rights issue. Agria intends to take up these rights at an aggregate issue price of NZ$25.6 million. Of their remaining rights, RPI has indicated to PGG Wrightson that they will take up at least 2.7 million rights. Upon completion of the rights issue, it is expected that RPI will have an equity interest of at least 11.8 percent in PGG Wrightson.

PGC, which currently has a shareholding of 20.7 percent of PGG Wrightson, has committed to take up all of its entitlement under the issue. Upon completion of the issue, PGC will have an equity interest of approximately 18.3 percent in PGG Wrightson. The reduction from the present holding of 20.7 percent to 18.3 percent reflects dilution resulting from the placement of PGG Wrightson shares to Agria referred to above.

As a result of Agria's participation in the rights issue and intention to exercise rights purchased from RPI, Agria is expected to reach a shareholding of 19.0 percent in PGG Wrightson. Agria will be entitled to nominate up to two directors to PGG Wrightson's Board following the completion of the rights offer.

Agria also intends to subscribe for convertible redeemable notes (CRNs) in PGG Wrightson to the amount of approximately NZ$32.5 million. The CRNs placement is expected to be completed in January 2010. The proceeds from the CRNs will be invested as new capital into PGG Wrightson Finance Limited, a wholly-owned subsidiary of PGG Wrightson, to enhance its regulatory capital and provide greater liquidity for its future growth.

The New Zealand Government has approved Agria's investment, following a review by the New Zealand Overseas Investment Office.

About Agria Corporation

Agria Corporation (NYSE: GRO) is an innovative China-based agri-solutions provider focusing on research and development, production and distribution of three different types of upstream agricultural products. Its diversified portfolio of products comprises corn seeds, sheep breeding and seedlings, including proprietary products. For more information about Agria Corporation, please visit www.agriacorp.com.

[Doyle]

Forecasting strong cash flows, and are planing a massive pay down in debt.

Fy2010 profit after tax expected to be around 25mil. Thats roughly in-line with estimates i've seen lately. I thought it would be a little more.

Earnings down 40% on last year over first four months so they are expecting a some pickup in sales over next 8 months.

Was hoping the forecast will be a little more. On balance it seems like current share price probably a reasonably fair reflection. I'm picking it will go to 70-75 cents prior to record date.

But then as a shareholder I spose I would see the positives.
Discl:Hold Pgw

[Anna Naum]

Forecasting strong cash flows, and are planing a massive pay down in debt.

Fy2010 profit after tax expected to be around 25mil. Thats roughly in-line with estimates i've seen lately. I thought it would be a little more.

Earnings down 40% on last year over first four months so they are expecting a some pickup in sales over next 8 months.

Was hoping the forecast will be a little more. On balance it seems like current share price probably a reasonably fair reflection. I'm picking it will go to 70-75 cents prior to record date.

But then as a shareholder I spose I would see the positives.
Discl:Hold Pgw

PGC traded down post announcement I think. Would be a big ask to see PGW trade up, but as a holder I can understand your hope.

[beacon]

RPI currently has a shareholding of 27.5 percent and has undertaken to sell to Agria 56.8 million of the rights due to it under the rights issue. Agria intends to take up these rights at an aggregate issue price of NZ$25.6 million. Of their remaining rights, RPI has indicated to PGG Wrightson that they will take up at least 2.7 million rights. Upon completion of the rights issue, it is expected that RPI will have an equity interest of at least 11.8 percent in PGG Wrightson.



Tick GFC receding
Tick Global population exponential growth expected
Tick Agricultural commodities to boom
Tick Low interest rates
Tick FTA NZ US
Tick FTA NZ Asia
Tick Foot in the door in china
Tick NZ OIC approves Agria action
Tick PGC cap raising
Tick SFF sorted
Tick RPI sorted
Tick Fonterra payout up
Tick PGW bank debt noose cut
Tick New board
Tick Attractive rights price
Tick, tick, tick, tick...
Let's hope some vital lessons were learnt. Everyone makes mistakes, that is forgiveable. Repeating them is not ...

[Doyle]

PGC traded down post announcement I think. Would be a big ask to see PGW trade up, but as a holder I can understand your hope.

PGC is still on trading halt.

[pigeon]

I believe PGW presents a similar opportunity that NPX did at the start of this year, wouldn't be surprised that we saw a share consolidation after the capital raising is completed then see the price drift downwards for a bit- that's when I'm going to load up

[Doyle]

Will PGW trade today? I'm thinking maybe not. I'm thinking thats why they picked friday. The results of RPI rights placement surely won't be announced until market close today. so trading halt lifted monday.

[Doyle]

Stated at the briefing that NPAT of 24.1 million was based on original Fonterra payout of $4.55. SO maybe some upside risk to that figure.

[flyingfox]

anyone knows what's agria's average cost per share?

[Doyle]

Won't know before the bookbuild is announced.

Average price prior to taking up RPIS rights will be 65.2 cents. So the overall average will be less than that I wuld think. Probably somewhere between 58-62cents.

[beacon]

less than 80c, more than 50c. RPI won't reveal cost of rights sold, but reasonable guesses can be made

[beacon]

buyers today at 65c who take up rights will get it at 55c.

[Snoopy]

anyone knows what's agria's average cost per share?


For the initial stake of 13%, Agria will pay 88c per share. If they take up all of their rights entitlement at 45c they will still own 13% of the company but the average price paid per share would be:

[8(88c)+9(45c)]/17= 65.2c

However, we know that after the rights issue closes, Agria will actually have 19% of the company due to the extra rights acquired. The 'best case' scenario for Agria is that they only pay 45c per share for those extra shares. If that happens the average price paid by Agria will be:

13(0.652)+6(0.45)/19= 58.8c

If the price Agria pay for the acquired rights is more than 45c then the average price paid per share will increase. I hope that answers your question FlyingFox.

SNOOPY

[flyingfox]

:)ahh, so many intelligent people here

thanks guys!

[flyingfox]

it's trading now,quite...

[flyingfox]

not really quite, last 65c order will be gone soon, next is 70c, oh interesting...

[meesham]

it's trading now,quite...

They left it right until the end of the day, it'll be interesting to see what happens Monday morning. I'm not sure what to think about the share issue, my holding isn't that big but I'm just not sure if I'm chasing good money after bad.

[flyingfox]

few mins left today, have a good wknd everyone! money is just a number...

[flyingfox]

some of the offers very funny , selling 11000 at 60c when the buy offer is 70000 at 65c?
dont make it too obvious ok?

last post today, going home...

[bung5]

some of the offers very funny , selling 11000 at 60c when the buy offer is 70000 at 65c?
dont make it too obvious ok?

last post today, going home...


yeah don't understand what is going on there . buying at 70c ... selling at 60c but no trades....

[Balance]

some of the offers very funny , selling 11000 at 60c when the buy offer is 70000 at 65c?
dont make it too obvious ok?

last post today, going home...

It's matching time, guys.

[flyingfox]

this is really the last

very easy to understand, that guy sell at 60c want to pick a big bargain, if he/she just want to sell why sell this cheap?

it's a war..and seems those ones want to pick bargains have lot more bullets than 10k, but bullets will be used up sometime.

[Snoopy]

I'm not sure what to think about the share issue, my holding isn't that big but I'm just not sure if I'm chasing good money after bad.


Total PGW shares on issue at 31 July 2009: 315,815,616

STEP 1:
Agria to be issued shares representing 13% of the compnay:

0.13a + 315,815,616 = a => a=363,006,455 (new share total B4 rights issue)

That means the number of shares initially issued to Agria is:

0.13x 363,006,455= 47,190,839


STEP 2:
9:8 rights issue

=> 363,006,455[ 1+(9/8)] = 771,388,717 (total number of shares after rights issue)


STEP 3:

Projected NPAT of $24.1m means projected earnings per share of:

$24.1/ 771.4m = 3.1cps.

If you can buy shares at 45c, this represents a projected PE ratio of

45/3.1= 14.5

This is of course a 'low cycle' result. If you believe Norgates vision for the potential of PGW, the underlying business will earn $40m per year in 'normal' times. Add to that the interest rate savings caused by $277m of debt being retired (at 8% that equates to 0.7x$22.2m=$15.5m after tax ) and you get a potential net profit of some $55m or 7.2cps.

At 45c you are buying on a 'Norgate wish PE' of

45/7.2= 6.25

So is 45c a bargain or not? I guess it depends how you see things panning out after the cash issue money is raised!

SNOOPY

discl: hold PGW (and will be taking up all my rights.)

[winner69]

Snoopy

The PGW presentation has some precise share numbers quoted

The placement to Agria is 41,100,000 shares at 88 cents (only gives then 11,5%)

The 9 for 8 will result in 401,530,068 shares

Which says final number of shares 758 million odd

Doesn't alter your other workings much

Seeing Norgate has been rather delusionary in all this what do really think of his $40m figure?

[biker]

Interesting that in the media brief, they were particularly emphatic that none of the latest arrangements put any impediment in the way of selling PGWF at any stage.
I think there is more to come on this down the track.

MARAC/PGWF/CBS/........Banking license/registered bank ?

[meesham]

Thanks Snoopy, that's very helpful.

[GTM 3442]

Interesting that in the media brief, they were particularly emphatic that none of the latest arrangements put any impediment in the way of selling PGWF at any stage.
I think there is more to come on this down the track.

MARAC/PGWF/CBS/........Banking license/registered bank ?

Um. . . . . didn't they sell the finance arm once before ?

So, having gone back into finance, why would they sell it again ?

Wouldn't it make more sense to glue a bank together out of Marac, SCF, and PGWF ?

[bull....]

What price at 70c is the ex rights price? and rights price

[beacon]

TERP 57. rights 2-21c range expected. At TERP 57, rights fair value 12c approx

[Doyle]

70 cents would imply an ex-rights price of 56.7 cents. Therefore rights in theory would be worth 11.7 cents each.

Or for every share you hold you receive 13.16 cents worth of rights.

Interesting to know what agria paid for their rights. One woul guess around 10 cents but given they paid 88 cents for the heads I'm guessing it may be a little more than this, alot of the instos are upgrading their recommendations so its reasonable to infer they may have participated in RPI'S bookbuild.


Solid trading last few days looks like the market priced in the cap raising reasonably well prior to the announcement.

[Balance]

Short-coverers being squeezed?

[whatsup]

Whens the ex date?

[Balance]

Big buying interest - judging by bid side. Wonder what's going on.

[Doyle]

Whens the ex date?

26th, This thursday is the record date. Ex Rights on friday (just from memory).

[flyingfox]

buyers will bid higher i guess, seems most sellers would like to hold if can't sell at desirable price.

for me it hasn't reach the price i want to reduce, so i maybe still take the full offer..

[Doyle]

RPI's rights went in the bookbuild for 10 cents each according to stuff.co.nz.

Yesterdays close was 68 cents so post rights implied value of 55.8 cents.

Expect trading in rights of 10-10.8 cents for a start then.

Most the analsyts interviewed thought the rights price would be strongly supported and shouldn't fall much below the 10 cent mark as their was strong demand for RPI's Bookbuild.

Discl: Hold PGW and intend to take up my rights.

[flyingfox]

maybe a silly question, so if i have 8 shares before, now i have 9 rights could trade, until 14 Dec, is that correct?
or i have 17 rights?first time cap raising..

[Doyle]

maybe a silly question, so if i have 8 shares before, now i have 9 rights could trade, until 14 Dec, is that correct?
or i have 17 rights?first time cap raising..

If you have 8 shares before. you now have 8 shares plus 9 rights. On the 14 dec if you havn't either sold your rights or subsribed, your rights lapse and you just have the 8 shares again.

[RazorX]

I have another silly question - How do I take up my rights? It's showing in my portfolio with Direct broking but I have no idea how to take them up. This is my first rights issue so I'm a little lost. :o

Scrap that question I have found the answer - I hope:

"Offer document and Entitlement and Acceptance Form mailed to eligible shareholders
27-30 November 2009"

[flyingfox]

I think we can either sell them, new security code is PWGRA
or accpet the offer to buy 9 new shares at 0.45, documents will be posted to us soon.

[meesham]

Quite a bit of movement with PGWRA today, up 1.1c with a volume of 3117178. I ended up selling my rights today, I'm pretty happy with the size of the holding I have with PGW and I'd probably start having trouble sleeping if I made it any bigger :)

[geezy]

do i get any rights PGWRA through my holdings with PGC? :D

[percy]

no,but
pgc are taking up all their rights.

[Doyle]

Quite a bit of movement with PGWRA today, up 1.1c with a volume of 3117178. I ended up selling my rights today, I'm pretty happy with the size of the holding I have with PGW and I'd probably start having trouble sleeping if I made it any bigger :)

I think i'll prefer the excitment of not being able to sleep, SP is back to roughly my average purchase price now(when rights value is added), so I'm going to take up the rights and prepare myself for a wild ride. Reasonably strong trading in the rights, on light to moderate volumes, suggests not that many people are selling them. Still plenty of time for trading mind you, I didn't even get my entitilement letter until yesterday.

[flyingfox]

agria action suit dismissed...

[Doyle]

agria action suit dismissed...

Finally some news that suggests that the directors do know what they are doing after all. Things are really starting to line up for PGW wouldn't be suprised to see SP back to triple figures late next year.

[flyingfox]

Finally some news that suggests that the directors do know what they are doing after all. Things are really starting to line up for PGW wouldn't be suprised to see SP back to triple figures late next year.

i hope so
Also I guess farmer will increase production of milk, maybe already increased , if they have good market sense should have predicted the price trend

[geezy]

PGW just gotta solve their debt issues and looks like they did :) looking bright :) i m in

[RazorX]

Just took up all of my rights. Brings my overall cost down to 58.6 cents including brokerage. Considering that the SP is currently at 62 cents I am happy. Glad I didn't sell at 78 cents a few months ago like someone at work suggested that I should. Great news about Agria too.

[flyingfox]

Just took up all of my rights. Brings my overall cost down to 58.6 cents including brokerage. Considering that the SP is currently at 62 cents I am happy. Glad I didn't sell at 78 cents a few months ago like someone at work suggested that I should. Great news about Agria too.

If whoever sold at 78 could bought back at 60 afterward they would earn much more.
everyones knows what buffet said ,only few ones could be brave enough to buy when everyone is selling, and still enough to sell when everyone is buying.
But PGW rally is just started i believe, it was from the very bottom.

[Steve]

Anyone want to guess an uptake% (excl any underwrite washup)?

My guess is 82%. :)

[Doyle]

Anyone want to guess an uptake% (excl any underwrite washup)?

My guess is 82%. :)

Would have thought it would be a lot higher? Your basically asking how many people will simply let there rights lapse. PGC acheived 87% uptak despite being extremely dillutionary and not being able to give away the rights at the end of trading. I would guess 97/98% if your asking what I think your asking. Surely there are not that many lazy shareholders out there.

[flyingfox]

could people sell PGWRA if they don't want to take all up?
must be over 90% i bet

[meesham]

could people sell PGWRA if they don't want to take all up?
must be over 90% i bet

Yep I sold all my rights. The weird thing was the price at which I sold my rights + 45cents was more than the current share price, I'm guessing people are expecting the SP to go up before the 23rd of December.

[RazorX]

If whoever sold at 78 could bought back at 60 afterward they would earn much more.
everyones knows what buffet said ,only few ones could be brave enough to buy when everyone is selling, and still enough to sell when everyone is buying.
But PGW rally is just started i believe, it was from the very bottom.

Your point is very true flyingfox if I had had enough shares. I think by the time I had taken into account brokerage costs of selling and then buying back I would have ended up virtually even. That's why I didn't go to the trouble. I didn't have enough shares to make the 7 cent gain (From 71 cents when I bought) enough to generate a profit. Probably the buying back @ 60 cents I could have gained in hindsight but I guess that's a bit of a learning curve :)

Also I'm trying to stay out of the IRD's radar by not trading shares, but buying for investments. Still fine tuning my strategy I guess.

[flyingfox]

Your point is very true flyingfox if I had had enough shares. I think by the time I had taken into account brokerage costs of selling and then buying back I would have ended up virtually even. That's why I didn't go to the trouble. I didn't have enough shares to make the 7 cent gain (From 71 cents when I bought) enough to generate a profit. Probably the buying back @ 60 cents I could have gained in hindsight but I guess that's a bit of a learning curve :)

Also I'm trying to stay out of the IRD's radar by not trading shares, but buying for investments. Still fine tuning my strategy I guess.

:)myself bought my first lot at 97c, and reduced average to 58c now.
i haven't done "should do" things as well but in a share market there's no point to feel regret ever,not many people could that's why we are not as rich as buffet mate


BTW, IRD track sharetrading?really i didn't know before.
If they charge for my gain do they pay back if I make loss?I traded more than 30 times last year, only through the transaction history it's really hard to tell i made gain or loss

[RazorX]

I don't know if they 'track' share trading. Technically we are supposed to keep 'adequate' (Defined by the IRD depending on how much you owe them I'd say) records so that we can track our overall profit.

I am not completely sure about capital loss being deductible - I'll have to find out. Accounting for investments is a very messy sticky area of accounting. (Especially with all the new rules being constantly brought in an changed.) As to whether you are 'supposed' do file a tax return depends on your motive or reason for buying/selling shares. If you do it to trade then gain is taxable, if you do it for investments then its not taxable. The onus is on the trader to prove that he/she is investing not trading. I think a general rule is that if you buy and sell the same share inside a year the IRD considers it trading. Also the sheer volume can count. I.e. you might have only traded once during the year but with such a large gain that IRD considers it trading.

Hmm I think we are going off topic here but that's a few things that might help. :)

[Doyle]

Strictly speaking if you buy shares for the "purpose" of selling them for capital gain. Whicorced to pay tah is pretty much what I do, that gain is taxable. However the IRD basically can't be bothered going after small time traders, instead they look for big time traders, guys who are making 300-400 k a year off trading, and look to set a precedent against them. The IRD is growing in confidence lately and I wouldn't be suprised if there are people being fx on this sort of investing as we speak. Its very difficult if your are a trader, to prove that your not trading for capital gain, so most people when questioned simply give in and pay the tax.

If you use a TA system your particularly vulnerable to being taxed, the second you even mention the word chart to the IRD dollar signs appear in their eyes.

[meesham]

I am not completely sure about capital loss being deductible - I'll have to find out.

My accountant has told me I will probably be classed as a trader for this FY, but he did say that my capital losses are deductable (luckily my gains are much bigger than my losses). I'd speak to an accountant, unfortunately the rules in NZ are open to interpretation, it's a bit easier over in Australia with hard and fast capital gains tax rules (but then if you're just an investor you're worse off).

[flyingfox]

My accountant has told me I will probably be classed as a trader for this FY, but he did say that my capital losses are deductable (luckily my gains are much bigger than my losses). I'd speak to an accountant, unfortunately the rules in NZ are open to interpretation, it's a bit easier over in Australia with hard and fast capital gains tax rules (but then if you're just an investor you're worse off).

this must be a grey area because we keep the record not them , we do the calculations, we clarify the "intention"
We don’t usually just buy 1000 then sell 1000 after a yr, we have to accumulate, reduce or hold according to the price trend
so can I say my intention is investment but adjustment need to be made due to market/economy condition- I did hold the same stock for long term ,just adjusting the volume to avoid loss

[RazorX]

The problem is that we have to 'prove' our intention was only for investing not trading. You know the IRD - they'll say you are trading until you prove otherwise. Kinda the opposite to "innocent until proven guilty".

[percy]

meesham,
try not to claim your losses asyou will allways be classed a trader and have to pay tax.
in the longer term if you get 6 out of 10 companies right that you invest in you should make money.
i would tell your accountant that you see yourself as a long term investor,who is trying to build a nest egg where the dividends that you will receive, will suppllement your income,and help you to be better off in the long term.
to prove your point buy a copy of any of warren buffett,s books and keep it as proof that you are in deed a long term investor.
you know what a long term investment is?.
answer.. a short term investment that did not work out right!!!
good luck. donot forget to lend your accountant the buffett book.
he may believe you.

[COLIN]

Over the years a lot has been posted on Sharetrader, at various times, on this whole vexed question of what constitutes a trader as opposed to an investor. I seem to recall that there used to be a separate thread on various Taxation Issues - presumably it is still there, I haven't looked.

However, there was a very useful article in last week's NBR by Richard Inder, headed "Judgment gives investors OK to trade actively". It is a "must read" for those who are struggling to get a grip on this issue .

[percy]

colin
i agree the richard inder article is a must read.
i liked the quote"caution with the ird is a lesson well learned."

[meesham]

Thanks everyone, I couldn't find the article on the NBR website so I'll go track down a copy at the book store.

[flyingfox]

Anyone good at interpreting disclosure noticet?Did some directors acquired more rights or they just been allotted by the company?

[RazorX]

Looks like the Director bought some rights. Possibly a good sign if Directors are willing to buy up more rights.

[Snoopy]

PGW just gotta solve their debt issues and looks like they did :) looking bright :) i m in


Did you check out the "Simplified Disclosure Prospectus" that got sent to shareholders Geezy?

If you go to page 52 you get the prospective financial statements as at June 30th 2010, which is after all of the current capital raising is done and dusted. On page 52 PGW list their projected income for the year at $24.1m.

If you then go to page 55 , I calculate the short and long term debt liabilities (excluding PGW Finance, which are liabilities backed up by customer borrowers assets) to be forecast as follows:

Short Term Debt: Nil
Long Term Debt: $185.269m+ $13.68m + $0.799m= $199.7m

The minimum capital repayment time is therefore forecast to be:

$199.7m/$24.1m= 8.3 years

I would class that level of debt, relative to income, as medium to high. High enough to be told that we as shareholders will have to forget about getting paid any dividends for a while.

PGW have done enough to stave of the banks. But if PGW have a few more bad years they may need to go back to shareholders again for more capital. I would describe the current capital raising as a 'patch up job', rather than a long term fix.

SNOOPY

discl: hold PGW, and have taken up my rights (and then some) under the assumption that the patches have been put in the right places.

[flyingfox]

Did you check out the "Simplified Disclosure Prospectus" that got sent to shareholders Geezy?

If you go to page 52 you get the prospective financial statements as at June 30th 2010, which is after all of the current capital raising is done and dusted. On page 52 PGW list their projected income for the year at $24.1m.

If you then go to page 55 , I calculate the short and long term debt liabilities (excluding PGW Finance, which are liabilities backed up by customer borrowers assets) to be forecast as follows:

Short Term Debt: Nil
Long Term Debt: $185.269m+ $13.68m + $0.799m= $199.7m

The minimum capital repayment time is therefore forecast to be:

$199.7m/$24.1m= 8.3 years

I would class that level of debt, relative to income, as medium to high. High enough to be told that we as shareholders will have to forget about getting paid any dividends for a while.

PGW have done enough to stave of the banks. But if PGW have a few more bad years they may need to go back to shareholders again for more capital. I would describe the current capital raising as a 'patch up job', rather than a long term fix.

SNOOPY

discl: hold PGW, and have taken up my rights (and then some) under the assumption that the patches have been put in the right places.

i think if pgw have few more bad years it will be more serious than another cap raising,its not a small company..

I just wait and see what agria will do,they must have some reason to buy into pgw, maybe new business?maybe nothing-but why they want to be the no.1 shareholder,maybe pgw shares seems quite a bargain now ?

[Snoopy]

If you go to page 52 you get the prospective financial statements as at June 30th 2010, which is after all of the current capital raising is done and dusted. On page 52 PGW list their projected income for the year at $24.1m.

If you then go to page 55 , I calculate the short and long term debt liabilities (excluding PGW Finance, which are liabilities backed up by customer borrowers assets) to be forecast as follows:

Short Term Debt: Nil
Long Term Debt: $185.269m+ $13.68m + $0.799m= $199.7m

The minimum capital repayment time is therefore forecast to be:

$199.7m/$24.1m= 8.3 years

I would class that level of debt, relative to income, as medium to high. High enough to be told that we as shareholders will have to forget about getting paid any dividends for a while.


I thought about this post some more after I made it. While I still regard what I posted as 'right' it is probably not fair. Why not? Because the FY2010 year for PGW covers the period "from 1st July 2009 to 30th June 2010". PGW don't get most of their capital raised during FY2009 until the end of December 2009. That means for the first half of FY2010 they will be still be paying interest on the company debt as it was before the capital raising. Any relief in interest payments will have to wait until all of the new capital is bedded down.

The projected reduction in group debt (excluding finance) from $455.0m as at 30th June 2009 to $185.3m (see p55 of the Simplified Disclosure Prospectus) represents $269.7m of bank debt coming off the books. Furthermore I expect that the projected FY2010 net interest and finance costs will include the $9.9m in equity raising costs (see p12 of the Simplified Disclosure Prospectus).

Projected net interest and finance costs for FY2010 are listed as $37.34m. If we take the finance and interest costs for HY2009 as an indicatior of the same half charges for HY2010, that figure is $16.41m (source Report for six month period ending 31-12-2008, the HY2009 report, page 10). That means the expected interest cost for the second HY2010 (the period 1st January 2010 to 30th June 2010) may be calculated as follows.

$37.34m-$16.41m-$9.90m = $11.03m (A)

Finally we can estimate what the first half year interest costs would have been if if the capital raising had been in place right at the start of the financial year.

$16.41m($185.3m/$455.0m)= $6.68m (B)

Adding (A) and (B) we get a 'normalised interest bill' of $17.71m. That is some $20m less than the prospectus projected net interest and finance costs for FY2010 of $37.34m.

In turn this means the 'normalised FY2010 profit' is:

$24.1m + (0.7)$20m= $38m

And that means the 'normalised debt repayment time' is

$199.7m/$38m= 5.3 years

That is a more 'medium level of debt' that makes me feel more comfortable with the scale of the whole debt raising exercise.

SNOOPY

[Snoopy]

i think if pgw have few more bad years it will be more serious than another cap raising, its not a small company..


I am not suggesting that PGW will have more bad years. I am just saying it won't be good for the company if such a thing were to happen, no matter how unlikely that scenario is.



I just wait and see what agria will do,they must have some reason to buy into pgw, maybe new business?maybe nothing-but why they want to be the no.1 shareholder,maybe pgw shares seems quite a bargain now ?


According to p7 of the prospectus Agria spent $36.2m buying shares at 88c. That would have netted them 41.1m shares. There were some 315.8m shares on issue before that, so that gives a total of 356.9 shares were on issue before the rights offer.

Post rights there were 9 shares issued for every 8 already out there. So the total number of shares on issue will be:

356.9m + (9/8)356.9m = 758.4m

With a normalised profit of $38m, this suggests normalised earnings per share of 5c. At 60c PGW will be sitting on a 'normalised PE' of 12. Whether that is cheap or not depends on where you and Agria think underlying earnings will go from here. But on the bare figures to date, I'm not expecting a lot of short term upside once the capital raising is completed.

SNOOPY

[Dr_Who]

But on the bare figures to date, I'm not expecting a lot of short term upside once the capital raising is completed.

SNOOPY\\


Good numbers crunching Snoopy.

Just have to look at ELD to see that PGW may not perform after cap raising. ELD looks cheaper compare to PGW at these levels. PGW have alot of tidying up at home before they can venture off to any potential pot of gold at the end of the rainbow.

[RazorX]

Looks like the capital raising was a success: http://www.nzx.com/home/3161165/PGGW-issue-seen-as-relatively-successful

[Doyle]

Looks like the capital raising was a success: http://www.nzx.com/home/3161165/PGGW-issue-seen-as-relatively-successful

Todays closing SP seems to agree.

[Balance]

\\


Good numbers crunching Snoopy.

Just have to look at ELD to see that PGW may not perform after cap raising. ELD looks cheaper compare to PGW at these levels. PGW have alot of tidying up at home before they can venture off to any potential pot of gold at the end of the rainbow.

ELD did not raise enough capital and had an asset sale program which is not going well. Latest attempt blocked in Australia.

PGW took its time and raise the funding it needed. No need for asset sales.

[flyingfox]

seems like no reaction to the news?
is it just a neutral one?

[Doyle]

seems like no reaction to the news?
is it just a neutral one?

What news? I really have no Idea what your talking about.

[flyingfox]

http://www.nzx.com/news/markets/3174324/PGGW-to-repay-extra-77m-early

ok maybe it's not "news", just an article?

[Doyle]

Oh yeah interesting, Just an extension on yesterdays banking arrangement news, but still good news in the sense that wrightsons are paying down the debt that got them into trouble, but bad news in the sense that PGW is starting to become quite risk adverse. Regardless things are lining up very nicely for PGW.

[flyingfox]

Oh yeah interesting, Just an extension on yesterdays banking arrangement news, but still good news in the sense that wrightsons are paying down the debt that got them into trouble, but bad news in the sense that PGW is starting to become quite risk adverse. Regardless things are lining up very nicely for PGW.

good point, so overall it's a neutral little news

[beacon]

Its a positive, they are getting rid of shackles...

[flyingfox]

seems like sp will be in adjustment for a while, just as expected.
I guess resistences are 60/70, any thoughts?

[Doyle]

Buying Resistance at 62 cents and 59 cents selling resistance at 67 cents and probably again at 72/73 cents.

Expect it to trade 62-67 in near term. Going through re-adjustment at the moment as people review their holdings at the end of the year. A number of people will be overweighted in PGW due to the rights issue. Seeing as it was at a post rights premium, seems like it was a good time to rebalance, but I still expect it to hold at 62 cents.

[root]

Buying Resistance at 62 cents and 59 cents selling resistance at 67 cents and probably again at 72/73 cents.

Expect it to trade 62-67 in near term. Going through re-adjustment at the moment as people review their holdings at the end of the year. A number of people will be overweighted in PGW due to the rights issue. Seeing as it was at a post rights premium, seems like it was a good time to rebalance, but I still expect it to hold at 62 cents.
I think you're right....hopefully support at 0.61/0.62 and next resistance at 0.69/0.70.

[flyingfox]

ah ha, allotment of new shares on tomorrow, will it be on halt then?

[root]

ah ha, allotment of new shares on tomorrow, will it be on halt then?
I don't think so, should just be a disclosure.....some of the experts may have a better idea.

[mouse]

Has anyone ideas on why the price of PGG Wrightson is dropping. They have the rights issue completed and the price now is less than what could have been got by not buying the rights and just selling the options.

[Dr_Who]

\\


Good numbers crunching Snoopy.

Just have to look at ELD to see that PGW may not perform after cap raising. ELD looks cheaper compare to PGW at these levels. PGW have alot of tidying up at home before they can venture off to any potential pot of gold at the end of the rainbow.

Mouse. I posted the above on the 12/12 during the rights issue. PGW looks fully valued at these levels above the 60 cents.

disc: not a shareholder and did not buy any shares during the rights trading

[Balance]

Has anyone ideas on why the price of PGG Wrightson is dropping. They have the rights issue completed and the price now is less than what could have been got by not buying the rights and just selling the options.

Sub-underwriters taking their profits - they got their shares at 45c so plenty of profit in it.

In contrast, ELD struggled to even get its sp above the cash issue price.

[flyingfox]

maybe stochastic is not quite relevant but according to that adjustment is too normal.
Also sell pressure must increased after allotment, not everyone want to hold long term. That's just normal if more panic people selling I'm going to pick up some more below 58c, history tells when PGW shareholders panic, you should get your money ready.

Dr who you think 60c is fair value?so the valuation price given by Aspect is a joke?

[root]

Looking at their disclosure today AMP Capital Investors Ltd must have been buying rights.

[Balance]

Looking at their disclosure today AMP Capital Investors Ltd must have been buying rights.

They stated right at the beginning of the recovery that all these capital raisings are opportunities for them to get set in distressed companies which will come right.

So are they right?

[root]

They stated right at the beginning of the recovery that all these capital raisings are opportunities for them to get set in distressed companies which will come right.

So are they right?
I believe so, I've been happy with NPX and FPA, I must admit that PGW has had a different feel to it though. To be honest it's been a pretty hard year to lose money.

[mouse]

I believe so, I've been happy with NPX and FPA, I must admit that PGW has had a different feel to it though. To be honest it's been a pretty hard year to lose money.

Can you please explain what 'To be honest it's been a pretty hard year to lose money' means. Does it mean it is another loss this year with other losses also incurred, or does it mean, it has been very difficult to lose cash this year?

[Lizard]

Can you please explain what 'To be honest it's been a pretty hard year to lose money' means.

That even a chartist would have made money this year?

[Dr_Who]

I think it is time for a clean out of the old board who have destroyed shareholders value.

[root]

Have watched the buying pressure come in all day without seeing any significant news, definitely big volumes. Must be the market processing news that isn't readily available.

[macduffy]

Turnover often increases substantially for a period following a big rights issue. There's generally holders who have been reluctant to sell the rights at what they consider to be "give-away" prices, hoping for a better market once rights trading is out of the way. And institutional buyers often think that they will get some bargains once there is more liquidity following an issue.

We saw this with NPX where turnover increased following their issue.

[Phaedrus]

PGW would need to Close above 66 cents to end the 8 month downtrend and establish an uptrend.
(Today's close was 64 cents)

[Dr_Who]

Thank Ph. I'll keep buying then.

I like the board cleanup and hope they continue until we have a board that can move this company forward.

I ve bought some shares due to the cleanup.

[Phaedrus]

While Moving averages, crossovers, trendlines, oscillators etc are affected by trends, they are completely separate entities and have nothing to do with trend definitions.
An Uptrend is a succession of higher highs and higher lows.
A downtrend is a succession of lower lows and lower highs.
The minimum requirement for an uptrend is a higher high after a higher low.
The minimum requirement for a downtrend is a lower low after a lower high.
A trend is assumed to be in place until it is reversed by the opposite trend.

PGW has been in a "medium-term" downtrend for about 8 months so far. This downtrend is composed of "short-term" uptrends and "short-term" downtrends with the net result being a series of lower highs and lower lows - a "medium-term" downtrend.

This all sounds more complicated than it really is. The chart below should be easier to understand.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/PGW112.gif

[PhaedrusFollower]

Thanks for that explanation P.

Am I to understand from this that the "buy" signal only comes once the medium term uptrend is reestablished...thus 66.5c?

Or, can I answer that myself for you, and realise that this is only one indicator...and I need to be looking at OBV and crossover lines to establish the actual buy point?

[Phaedrus]

Am I to understand from this that the "buy" signal only comes .........Think in terms of A buy signal, rather than THE buy signal. The chart below shows 10 indicators all of which will trigger buy signals sooner or later. You need to evaluate these signals as they occur and decide which one(s) you will act on. Remember that it is not good practice to act on the basis of a single isolated signal from any one indicator. On the other hand, neither is it necessary to wait until all 10 trigger before buying (although very conservative investors may do just that). What you are looking for is some confirmation, some degree of consensus before buying. The degree of consensus you require before buying is a personal decision based on your risk tolerance, fundamental assessment of the stock, etc.


I ... realise that this is only one indicator...and I need to be looking at OBV and crossover lines to establish the actual buy point?Right. Why restrict yourself to just 3 indicators though? I would also advise you to stop thinking about/looking for a single Buy point. I strongly advocate "stepping" into and out of positions, buying (or selling) incrementally as individual indicators fire off signals. Only if you want to invest a small sum of money (say <$15,000) would it be appropriate to look for a single buy point. This would be set by establishing some sort of consensus from the indicators you decide to use.

So, looking at the chart below :-
There was an OBV "step" and trendline break that gave a "Buy" signal in October. Generally speaking, isolated signals from a single indicator should be ignored.
On 11/1/10, PGW broke above its tentative trendline, giving a buy signal. This was confirmed to some degree by a rising OBV. Some would have bought on this basis. Others will be waiting for PGW to break above the moving average. More will be waiting for a break of the resistance at 66 cents (an uptrend) before acting. Different market participants set the bar at different heights - 3 applicable resistance levels are marked on the chart by light blue lines at 66/70/78. A break of each of these would be a buy signal. You can see that the 4 oscillators at the top of the chart have not triggered any buy signals as yet, though some are quite close.
The Market Strength colour plot is currently "khaki" (get ready to buy). It has reached that level before though, without going on to trigger a (light green) Buy signal.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/PGW113.gif

I don't like to give specific advice because you have to develop your own system to suit your individual situation, risk-tolerance and personality etc. Nevertheless I would suggest that anyone looking for a single PGW entry point wait for a break above the resistance at 66 cents before buying. The more cautious might prefer to wait for a break above 70 cents - a nice round number.

[Balance]

Big volumes going through. Big buying met by equally big selling.

Looks like sub-underwriters selling out - 40% profit simply too tempting.

[Doyle]

Underwriters only have around 20 million shares. At these volumes they would be running out pretty fast. Its not just underwriters anyone who bought in just before they went ex rights in the low 60's is sitting on a pretty tidy profit which is fairly tempting.

Discl: Hold PGW and am in it for the long haul.

[Snoopy]

Projected NPAT of $24.1m means projected earnings per share of:

$24.1/ 771.4m = 3.1cps.

If you can buy shares at 45c, this represents a projected PE ratio of

45/3.1= 14.5

This is of course a 'low cycle' result. If you believe Norgates vision for the potential of PGW, the underlying business will earn $40m per year in 'normal' times. Add to that the interest rate savings caused by $277m of debt being retired (at 8% that equates to 0.7x$22.2m=$15.5m after tax ) and you get a potential net profit of some $55m or 7.2cps.

At 45c you are buying on a 'Norgate wish PE' of

45/7.2= 6.25

So is 45c a bargain or not? I guess it depends how you see things panning out after the cash issue money is raised!

SNOOPY


At 64c PGW is now trading on a projected PE for FY2010 of 64/3.1= 20.6. Hardly cheap although the capital restructuring will shave that interest bill in future years. And if you believe the old Craig Norgate vision of $40m (which translates to $55m, or 7.2cps under the new capital structure) then PGW is trading on a FY2011 PE of 64/7.2 = 8.9.

Why am I bringing this to traders attention? Basically because the higher price you pay for this share the higher your long term risk. Suggesting that conservative investors should wait until the share price rises above 70c implies only buying when the PE shifts above 10. A PE of 10 strikes me as not inappropriate for this kind of company. 70c does not strike me as a low risk entry point. From a fundamentalist perspective, I think there are still a few ducks to be lined up to justify that 70c.

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? These are blue sky opportunities, to be sure. But a drought or flood in New Zealand or a moribund farm property market will more than offset these potential gains in the short term.

Historically a good time for buying shares 'in trouble' is around a week before the end of rights trading in the associated rights issue recapitalisation. The reason for that is that the 'Mom and Dad' investors are at that point of having to stump up cash for their rights and the opportunity to raise cash (should they need to by selling some of those rights) is a rapidly closing window. Thus you get a kind of 'SELL AT ANY PRICE' effect, of which more organized investors can take advantage. Being a conservative investor (at least by the standards of this forum!) I was able to load up with some extra rights/shares purchased at 59.5c. IMO this was a far better strategy than waiting for some sort of 'break out' above 70c!

I would say that even at 64c, 'conservative' investors have already missed the bus on PGW.

SNOOPY

[Snoopy]

RPI's rights went in the bookbuild for 10 cents each according to stuff.co.nz.


I wonder if Stuff got that right Doyle?

If you look at the post recapitalisation substantial shareholder disclosures for PGW, RPI disposed of 87,017,180 rights for $4,439,519.50. That equates to only 5.1c per right.

According to the FY2009 annual report RPI formerly held 44,150,684 plus 42,646,659 shares making a total of 86,797,343. That number of shares would have entitled them to

86,797,343 x 9/8 = 97,647,010 rights. If they subsequently sold 87,017,180 rights that woudl leave them 10,629,830 rights to take up. With a call of 45c on each right that means RPI would need to stump up:

10,629,830 x $0.45 = $4,783,423

to take up their remaining rights. That is in line with the proceeeds of the rights sold.

SNOOPY

[Snoopy]

If you look at the post recapitalisation substantial shareholder disclosures for PGW, RPI disposed of 87,017,180 rights for $4,439,519.50. That equates to only 5.1c per right.


The reason I am being a bit pedantic about this is that IIRC, RPI agreed to sell some of their rights to Agria as part of the book build. Agria will have done more due diligence than any of us on PGW. So I think it is worth working out what Agria considered it was worth paying for their total stake in PGW.

Agria started out with 41.1m new existing shares pre-rights issue bought at a price of 88c. This entitled them to 46,237,500 PGW rights which they subsequently took up at 45c. They then purchased more rights (at 5.1c?) which resulted in them acquiring 56,767,180 paid up shares at 50.1c.

If I am right then the average price that Agria paid for their PGW shares is:

[(41.1 x 0.88)+(46.2 x 0.45)+(56.7 x 0.501)]/[41.1+46.2+56.7] = 59.3c

Granted there may be a 'desperation discount' in there as PGW was in grave need of the cash. But even if the desperation discount was 20%, that would still equate to a fair value market price of 70c. That doesn't leave much capital gain potential for our 'conservative investor' buying in at 70c does it?

SNOOPY

discl: hold PGW

[Doyle]

I wonder if Stuff got that right Doyle?

If you look at the post recapitalisation substantial shareholder disclosures for PGW, RPI disposed of 87,017,180 rights for $4,439,519.50. That equates to only 5.1c per right.

According to the FY2009 annual report RPI formerly held 44,150,684 plus 42,646,659 shares making a total of 86,797,343. That number of shares would have entitled them to

86,797,343 x 9/8 = 97,647,010 rights. If they subsequently sold 87,017,180 rights that woudl leave them 10,629,830 rights to take up. With a call of 45c on each right that means RPI would need to stump up:

10,629,830 x $0.45 = $4,783,423

to take up their remaining rights. That is in line with the proceeeds of the rights sold.

SNOOPY

Hmmn interesting will look into it, According to their SSH RPI took up 8,424,975 rights. It seems hard to believe that the rights were let go for just 5.1 cents. Of course RPI was a distressed seller, but judging by volume there seems to be plenty of institutional support for PGW 10 cents seems more apporpriate given the indicative valuation was around 11.6 cents. And about half those rights were purchased by Agria at a pre-determined price, while even more were bought by Agria in the book build.

I don't see PGW as the cyclical company everyone insists it is. It still managed to produce an operating profit of 25 million last year and is forecast to do the same this year despite operating conditions. The actual basic operations of PGW are not as cyclical as one might think, not bad given the current conditions. More-over I see some serious upside to this years profit forecast- It was calculated on a dairy payout of $5.10. Add on the blue sky potential in China and I think a PE ratio of 13-14 is more appropriate and tend to value it on this basis.

Discl: My own ave cost is 58 cents per share, but on current information would need a share price around 80 cents to convince me to sell.

[Doyle]

From memory stuff was quoting Hamilton Hinton Green, with the 10 cents figure.
Found the disclosure notice you mentioned and as far as I can tell I agree the price was 5.1 cents per share. Interesting to note there was another sale of rights by RPI that acheived a 15.9 cent per right sale. Only a few million though, I'd say these may have been on market although the disclosure didn't say.

[Snoopy]

If I am right then the average price that Agria paid for their PGW shares is:

[(41.1 x 0.88)+(46.2 x 0.45)+(56.7 x 0.501)]/[41.1+46.2+56.7] = 59.3c


I have just done the above exercise myself to find out how much my own PGW shares owe me. I know that I shouldn't have done it as these historical exercises are largely meaningless from a future performance perspective. But I have calculated that each of my PGW shares now owe me 80c. Ouch! So I have lost capital, even if I haven't lost money (as some traders might think). I estimate that dividends received over my time as a shareholder equate to around 50c per share (allowing for the recent recapitalisation). And what timeframe is that?

Believe it or not I have been a PGW shareholder since 1995, so that is 14 years. Of course back in those days I held only a very few shares. Most of my shares were bought and/or taken up around the time of the rights issue a couple of months ago (a very good move) and prior to that in late 2006 and early 2007 when the Norgate steamship seemed unstoppable (not such a good move, with the benefit of credit crunch hindsight).

Overall I do not regard my overall investment performance in PGW as satisfactory. But having nailed my mast to the Norgate steamship in recent years I was always going to go where the Norgate ship went, and take the rub off from the consequences - be they good or bad. In one respect I have come out relatively well. And that is I think my own average PGW share buy price is (now) rather lower than Norgate/McConnan paid via their vehicle RPI! But I am certainly not bitter about anything that has happened. I have taken the big slug across the chin and moved on. Not from an ownership perspective you understand. I now own more PGW shares in number and percentage terms, even allowing for the recapitalisation, than ever. But I have moved on from that vision I was looking back on in the rear vision mirror.

Part of my long term investment strategy is to stay plugged into the backbone of the country in some form. I am open as to whether owning shares in PGW is the best way to do that. But when I look at some of the alternatives, like Allied Farmers or some of those meat company shares over the years I don't think that investing in PGW has been a bad choice even if the result (so far) has not been that great.

With some 758m PGW shares now on issue it is fair to say that however well PGW does, those events will move the share price less than half what they would have pre-recapitalisation. In a post credit crunch world, $1 a PGW share is now a distant dream. I would be very surprised if any shareholder on the register now will be alive to see it. Still that doesn't mean there aren't some good dividends to be harvested in the next few years, which is why I intend to hang around on that PGW share register.

SNOOPY

discl: hold PGW

[winner69]

In a post credit crunch world, $1 a PGW share is now a distant dream. I would be very surprised if any shareholder on the register now will be alive to see it. Still that doesn't mean there aren't some good dividends to be harvested in the next few years, which is why I intend to hang around on that PGW share register.

SNOOPY

discl: hold PGW

Snoopy - you have just spoilt the party for many ... surely once that new uptrend is confirmed $1 is a certainty?

But you are prob right. A $1 share price implies a market cap of $758m doesn't it .... and with a PE of say 10 they would need to be making $75m after tax sometime in the future to support a $1 share price.

Mind you from their guff they sent around in the rights issue they did forecast (I think) to have a book value of $650m at the end of F10 .... so in this context a market cap of $758m is not that stretched

as usual in your pragmatic way with a good dose of realism you have grasped what having 758 million share really means ... everything is spread around a lot more eh

Good way of looking at where the shareprice might be heading/

[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.