Originally Posted by
Snoopy
This transaction is, on the surface, very odd. The Cushings started with 3.1m PGW shares and add 17m to that - for a total of 20.1m shares. But with 754.8m shares on issue the Cushings still only have a stake of:
20.1m / 754.8m = 2.7% of the company
That isn't enough to do very much on its own. Yet, if you add that holding to the Ngai Tahu stake of 7.2%, then you get 9.9%. That is close to the 10% blocking stake required to thwart a delisting in the event of a third party takeover offer for the company. Given Ngai Tahu and the Cushings have been stakeholders for a while, perhaps they have 'buddied up' in the background, to cover themselves if Agria is forced to liquidate their remaining shareholding?
Another odd thing about the announcement was the following wording
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"The transaction will settle either five days after Agria confirms its bankers will let it sell, or 15 business days from the date of the agreement, according to a notice lodged with the NZX."
"If the banks don't agree to the deal within 20 working days, the agreement can be terminated by either party."
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This reads like Agria is already in the hands of its bankers, and so is in defacto receivership right now. We knew before today's announcement that Agria has big bank loans that are due to be repaid if/when the capital repayment comes through. We know that if Agria sell shares now, then their share of the capital repayment will reduce. So why would the banks let them sell, if they don't know what the final terms of any capital repayment is? If Agria was in charge of this transaction, would they not have got permission to sell in advance, before any public announcement was required? So if this sale was not initiated by Agria, it must have been initiated by the other party - the Cushings!
As I noted at the start of this post, it makes little sense as a stand alone transaction on its own. So IMO, there is a strong chance that Ngai Tahu are in on it, in some kind of informal way at least.
David Cushing acted as an alternative Wrightson director for Alan Lai in 2010. So we might infer that the Cushings, Alan Lai's Agria and Ngai Tahu are more than likely still on good buddy terms. And that means the sell down by Agria has, to date, been a Clayton's sell down.
As a separate question, I wonder why, given several opportunities, Ngai Tahu do not seem keen on putting more of their own capital into PGW at this point?
SNOOPY