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  1. #4366
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    Quote Originally Posted by steveb View Post
    And of course what happens tomorrow when you get in to work,there's a trading halt and takeover offer at double the price,and then you look out the window and see some pigs fly by!
    Shhhhhh - that's what I am hearing too!

  2. #4367
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    Their Chinese walls are certainly working.No leaks so far with only 7,500 traded so far today at 58cents.So it is going to be an exciting day tomorrow?

  3. #4368
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    Commerce Commission throwing a spanner in the works?

    https://www.nzherald.co.nz/business/...ectid=12170286

    "DLF Seeds' $434 million acquisition of NZX-listed PGG Wrightson has hit a possible snag after the Commerce Commission sent a "letter of issues" to the Danish co-operative.

    A letter of issues is sent if, following initial investigations, the Commission has concerns about potential competition issues that may arise from the proposed acquisition."
    Last edited by Balance; 03-12-2018 at 03:16 PM.

  4. #4369
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    Quote Originally Posted by Blendy View Post
    A person with no knowledge of shares but knows that I dabble just messaged me to say their friend just got a hot tip from their broker that PGW is about to dramatically go up! (isn't this how a bad investment story starts?!)
    I think that it is more that PGW was about to go down?

    http://www.scoop.co.nz/stories/BU181...tson-seeds.htm

    Better check who the broker and friend are - best to put them on your (and our) ignore & avoid list!
    Last edited by Balance; 03-12-2018 at 03:48 PM.

  5. #4370
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    Quote Originally Posted by Balance View Post
    Let's do the time warp again! Back to 1987!

    Spread rumours and try to get out of a bad position?

    Seriously, been a while since I read and saw such a blatant attempt to spread a false rumor by someone (not you, Blendy - you were one of the intended victims) to get out of a bad position.

    The Commerce Commission sounds like stopping the deal so it's back to the drawing board for Wrightson if that happens.

    http://www.sharechat.co.nz/article/6...le-to-dlf.html

    "The commission said the analysis of current market shares probably understates the importance of DLF's research and development programme, which has successfully developed novel ryegrass endophytes and high-performing ryegrass cultivars specifically for New Zealand conditions.

    "Our preliminary view is that DLF is a close competitor to PGW Seeds in the market for the production and supply of ryegrass and is generating competitive tension which may not be replicated by other competitors that have relatively small market shares," Commerce Commission senior investigator Andy Gallagher said in the letter.

    Because it takes 10 to 15 years to get a product ready for commercial release, the regulator said it was unlikely a new entrant could constrain the enlarged entity.

    The commission said it's also assessing whether imported turf seeds are a viable competitor to the combined business."

  6. #4371
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    https://www.nzherald.co.nz/business/...ectid=12174908

    Dodgy accounting, fraud and share price manipulation - Agria & Alan Lai are lucky to get away with just fines.

    Good news is that Wrightson is not implicated but next step now for OIO to decide whether Agria and its principals meet the 'good character' test.

    If not, could be some cheap shares coming onto the market in 2019?

  7. #4372
    Reincarnated Panthera Snow Leopard's Avatar
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    om mani peme hum

  8. #4373
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    Quote Originally Posted by Snow Leopard View Post
    Means Ngai Tahu has 27.4m shares to sell.

    Next stop 45c?

  9. #4374
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    Quote Originally Posted by Balance View Post
    Means Ngai Tahu has 27.4m shares to sell.

    Next stop 45c?
    I am not sure that Ngai Tahu is necessarily a seller. It could be they just want to disentangle themselves from the Agria web of companies. I am surprised that Agria didn't buy Ngai Tahu out. Because:

    1/ Now Agria only holds 46.583% of PGW.
    2/ And that means PGW will now be deconsolidated from the Agria accounts.
    3/ And that means the 'paper losses' that Agria has been holding on their balance sheet (because their average purchase PGW price is above 51c) will now have to go through the Agria profit and loss statement.

    If Agria have given up the right to consolidate PGW, does this mean that Agria are now going to (or be forced to) sell their PGW stake? Is there any other explanation for why Agria did not buy out Ngai Tahu for what now looks like an unwinding disaster for Agria?

    SNOOPY

    Discl: Topped up my PGW holding today, to increase my stake in this 'evolving play'.
    Last edited by Snoopy; 17-12-2018 at 04:10 PM.
    To be free or not to be free. That is the cash-flow question....

  10. #4375
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    Quote Originally Posted by Snoopy View Post
    I am not sure that Ngai Tahu is necessarily a seller. It could be they just want to disentangle themselves from the Agria web of companies. I am surprised that Agria didn't buy Ngai Tahu out. Because:

    1/ Now Agria only holds 46.583% of PGW.
    2/ And that means PGW will now be deconsolidated from the Agria accounts.
    3/ And that means the 'paper losses' that Agria has been holding on their balance sheet (because their average purchase PGW price is above 51c) will now have to go through the Agria profit and loss statement.

    If Agria have given up the right to consolidate PGW, does this mean that Agria are now going to (or be forced to) sell their PGW stake? Is there any other explanation for why Agria did not buy out Ngai Tahu for what now looks like an unwinding disaster for Agria?

    SNOOPY

    Discl: Topped up my PGW holding today, to increase my stake in this 'evolving play'.
    It is no secret that Agria's stake in on the market but there's no indication that there are any buyers? Hence, the decision to sell the Seeds & Grains division to get some much needed $$$ for Agria.

    If Seeds & Grains sale does not go through, what is the next step?

  11. #4376
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    Quote Originally Posted by Balance View Post
    It is no secret that Agria's stake in on the market but there's no indication that there are any buyers? Hence, the decision to sell the Seeds & Grains division to get some much needed $$$ for Agria.

    If Seeds & Grains sale does not go through, what is the next step?
    Agria is bankrupted? Then the shares will be put out to tender by the receiver. There will always be a buyer for PGW shares if the price is right!

    I value PGW at 46c as a going concern. So buying at 51c is speculative (although my overall average holding price remains below 46c) . I am picking the seed sale will go through but in a modified form, so that competition for rye grass seed is maintained. If that happens, I see some rerating of the 'PGG Rural Rump' business. Are you still on board the PGG train yourself Balance?

    SNOOPY
    To be free or not to be free. That is the cash-flow question....

  12. #4377
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    Quote Originally Posted by Snoopy View Post
    Agria is bankrupted? Then the shares will be put out to tender by the receiver. There will always be a buyer for PGW shares if the price is right!

    I value PGW at 46c as a going concern. So buying at 51c is speculative (although my overall average holding price remains below 46c) . I am picking the seed sale will go through but in a modified form, so that competition for rye grass seed is maintained. If that happens, I see some rerating of the 'PGG Rural Rump' business. Are you still on board the PGG train yourself Balance?

    SNOOPY
    Still long and wrong, my friend - I did reduce my position when the Commerce Commission announced it is investigating the sale of S&G.

    Then, there's the OIO decision to come re Agria's 'good character' test - a forgone conclusion Agria will be forced to sell.

    https://www.nzherald.co.nz/business/...ectid=12177017

    Comfortable with what I have got and will add when the forced sale down happen - it will be to institutions, I suspect.

  13. #4378
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    Quote Originally Posted by Balance View Post
    Still long and wrong, my friend - I did reduce my position when the Commerce Commission announced it is investigating the sale of S&G.

    Then, there's the OIO decision to come re Agria's 'good character' test - a forgone conclusion Agria will be forced to sell.
    I wouldn't be quite so sure. Lai and Agria haven't done anything wrong in New Zealand. And they have co-operated with the US Authorities in settling the outstanding legal matters in the USA. Also PGW management, at least at board level, seem very supportive of Lai.

    Quote Originally Posted by Balance View Post
    https://www.nzherald.co.nz/business/...ectid=12177017

    Comfortable with what I have got and will add when the forced sale down happen - it will be to institutions, I suspect.
    Fran O'Sullivan rightly identifies that the initial plan of Lai was to carve out PGGW Seeds and give it a more global reach. There have been many bolt on smaller seed company acquisitions in Australia, and much money spent on upgrading the distribution structure in Uruguay. I guess what changed is that PGW was unable to generate sufficient cash returns to allow Lai's leveraged buy in to PGW to be profitable. Perhaps after ten years Lai's lenders are getting restless? And there is no doubt the best way to raise cash quickly was to sell the crown jewels (the seeds business). So yes, the strategy of Lai has changed. But the failure of PGW seeds to generate sufficient profits outside of NZ to grow the overseas seeds business profitably is a big part of that. Can you blame Lai for that strategic expansion failure? And if not, can you blame Lai for changing his mind on which parts of the business to keep?

    Fran also argues that the overwhelming shareholder approval to sell the seeds business is irrelevant. Well, I voted against the seed sale for my shares. But doesn't the collective wishes of shareholders overall deserve to be respected?

    SNOOPY
    Last edited by Snoopy; 18-12-2018 at 03:52 PM.
    To be free or not to be free. That is the cash-flow question....

  14. #4379
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    Quote Originally Posted by Snoopy View Post
    Immediately after the AGM the PGW share price was 57c. If we take this as Mr Market's 'reference figure', then this 57c will be split into a capital payout amount and the remainder which is Mr Market's worth of 'PGW Rural Rump'.

    There are 754.048m PGW shares on issue. So working through both scenarios, for each share held, PGW shareholders can expect a capital repayment of either:

    $292m / 754.048m = 38.7cps OR $274m / 754.048m = 36.3cps

    By simple subtraction from the 57c PGW market value, we can now calculate the market value of 'PGW Rural Rump' after the seeds have split.

    57c - 38.7c = 18.3c OR 57c - 36.3c = 20.7c

    This gives us the information we need to work out post split PE ratios and dividend yields for both scenarios.

    SNOOPY
    Quote Originally Posted by Snoopy View Post
    Reworking these calculations with the figures re'Balance'd

    Scenario $100.5m debt repayment Scenario $118m debt repayment
    eps {A} 2.49c 2.60c
    PGW Rural Rump: Market Valuation {B} 18.3c 20.7c
    PE ratio {B}/{A} 7.2 8.0
    Gross Dividend Yield {A}/{B x 0.72} 18.9% 17.4%

    Notes

    1/ In the gross yield calculation I am assuming that all earnings are paid out as dividends. With 'Agria' better capitalized following the capital repayment and with some potential investment to be made on 'PGW Rural Rump' going forwards, this might not happen.

    2/ The PE ratios are looking fair for this type of business. But remember we are in a favourable time period in the rural cycle.

    3/ The potential dividend yield looks fantastic, with the slightly better capitalized version of 'PGW Rural Rump' showing a lower yield. But perhaps that better capitalization could be handy in an industry notorious for 'rural downturns'. And in such downturns I would expect any dividend yield to drop .
    The basis for some bargain hunting?

    With PGW trading at 51c, the relative market value of 'PGW Rural Rump' has been reduced:

    By simple subtraction from the 57c PGW market value, we can now calculate the market value of 'PGW Rural Rump' after the seeds have split.

    51c - 38.7c = 12.3c OR 51c - 36.3c = 14.7c

    This gives us the information we need to work out post split PE ratios and dividend yields for both scenarios.

    Scenario $100.5m debt repayment Scenario $118m debt repayment
    eps {A} 2.49c 2.60c
    PGW Rural Rump: Market Valuation {B} 12.3c 14.7c
    PE ratio {B}/{A} 4.9 5.7
    Gross Dividend Yield {A}/{B x 0.72} 28.1% 24.5%

    Notes

    1/ In the gross yield calculation I am assuming that all earnings are paid out as dividends. With 'Agria', or whoever the cornerstone stakeholder turns of to become, better capitalized following the capital repayment and with some potential investment to be made on 'PGW Rural Rump' going forwards, this might not happen.

    2/ The PE ratios are looking low, even for this type of business. But remember the capital repayment will not happen if the Danish deal gets shot down. And it is possible the whole Agria stake may yet be placed elsewhere at a discount.

    3/ The potential dividend yield looks fantastic, with the slightly better capitalized version of 'PGW Rural Rump' showing a lower yield. But perhaps better capitalization (keeping some of those earnings as new owner equity) could be handy in an industry notorious for 'rural downturns'. And in such downturns I would expect any dividend yield going forwards to drop. Some might say with the cutting down of the last dividend that this is already happening.

    It is these kinds of figures that make the suggestion that PGW is ripe for a market rerating not unreal. However the seed deal is in doubt. And if instead 'Agria' are forced to sell at a discount, then the PGW share price could crash to something like 40c. This is the other side of the coin that has to be born in mind when taking on an 'investment' like this

    SNOOPY
    Last edited by Snoopy; 19-12-2018 at 10:46 AM.
    To be free or not to be free. That is the cash-flow question....

  15. #4380
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    Quote Originally Posted by Snoopy View Post
    The basis for some bargain hunting?

    With PGW trading at 51c, the relative value of 'PGW Rural Rump' has been reduced:


    By simple subtraction from the 57c PGW market value, we can now calculate the market value of 'PGW Rural Rump' after the seeds have split.

    51c - 38.7c = 12.3c OR 51c - 36.3c = 14.7c

    This gives us the information we need to work out post split PE ratios and dividend yields for both scenarios.

    Scenario $100.5m debt repayment Scenario $118m debt repayment
    eps {A} 2.49c 2.60c
    PGW Rural Rump: Market Valuation {B} 12.3c 14.7c
    PE ratio {B}/{A} 4.9 5.7
    Gross Dividend Yield {A}/{B x 0.72} 28.1% 24.5%
    This is obviously assuming that the sum of the parts has the same value as the total. Not a given with many company split ups ...
    ----
    "Prediction is very difficult, especially about the future" (Niels Bohr)

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