PGW - PGG Wrightson

[sb9]

Agree.................
In the meantime,excellent new Chairman with a refreshed board,sensible CEO,strong balance sheet and an excellent yield.

Combination of those things and my homework/research over last week made me to jump on board.

[tim23]

Can anyone remember how much W & K paid for Fruitfed as I reckon that's the jewel in the business that remains.

[percy]

Can't remember sorry,but yes it remains the jewel in the business.
Remember who controlled W & K at the time,and sold it into PGW?
Could say things maybe going full circle,?

[winner69]

Can't remember sorry,but yes it remains the jewel in the business.
Remember who controlled W & K at the time,and sold it into PGW?
Could say things maybe going full circle,?

It’s like a big jig saw with only a few more pieces to complete eh

[sb9]

ASM tomorrow nice and early at 9.30am in Chch. I'm sure some of posters who attend will give us first hand account of things from there.

[nztx]

Can anyone remember how much W & K paid for Fruitfed as I reckon that's the jewel in the business that remains.

Here is info located online for the Fruitfed takeover by W&K:

http://www.delisted.co.nz/company/fr...pplies-limited


"delisted following the compulsory acquisition by Williams & Kettle - we understand the consideration offered by W&K was $5.00 in cash and 4 W&K shares for every 10 FSL shares"

"Delisted 3 December 1999"


& from Fruitfed Book:


http://www.hortnz.co.nz/assets/Uploa...-Book-MRes.pdf

" In 1992 the new company issued 8.4 million 50c shares and reserved
2.4 million for growers. The Charitable Trust retained 30 per cent thus ensuring that the Company had a stable major
shareholder and remained committed to its grower clients. Later Williams and Kettle ended up buying the company and in
time Pyne Gould Guiness Wrightson bought it. In Alexandra, Fruitfed’s old logo can still be seen on the old store."

[Snoopy]

A benefit of selling the seed division for well above book value is that it gives PGW a chance to get their debt mountain under control. But going against this is major shareholder Agria who for their own reasons want as large a cash payout as possible. I think it is worth asking the question:

'What shape will PGW be in debt wise if the capital repayment goes ahead as planned?"

One way to answer that is to work out the 'minimum debt repayment time' (assuming all profits were directed to paying off debt) for the company.

	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019 (adj F)
Short Term Bank Loans	$29.709m	$47.702m	$35.573m	$57.195m	$36.623m	$26.719m	$30.806m	$3.920m
add Long Term Bank Loans	$111.500m	$62.000m	$65.000m	$66.000m	$97.511m	$110.925m	$149.205m	$31.742m
add Net Defined Benefit Liability (Pension Plan deficit)	$26.264m	$20.819m	$13.528m	$14.655m	$25.729m	$15.827m	$10.574m	$10.761m
add Employee Entitlements	$17.531m	$15.910m	$20.837m	$20.511m	$20.982m	$22.946m	$31.163m	$31.163m
equals Total Bank and Worriesome Liabiliities {A}	$185.004m	$146.431m	$134.938m	$158.361m	$180.845m	$175.967m	$221.748m	$77.568m
NPAT (declared) {B}	$24.5m	$14.6m (*)	$42.3m	$32.8m	$39.6m	$46.3m	$27.1m	$11.4m
Minimum Debt Repayment Time {A}/{B} (in years)	7.55	10.02	3.19	4.83	4.57	3.80	8.18	6.80

(*) Excludes Goodwill Write Down of $321m

I was under the impression that debt at PGW would come down as a result of selling the seed division. However, this analysis shows it will not happen. When the capital return has been washed out of the system, the balance sheet that is left is still highly indebted (an MDRT figure of 6.8). I would consider anything between 2 and 5 qualifies as 'medium level debt'. They say we are in for a period of sustained low interest rates. It looks like PGWRR will need that.

The FY2019 results are out. So time to update my 'forecast results' to 'actual results'.

A benefit of selling the seed division for well above book value is that it gives PGW a chance to get their debt mountain under control. But going against this is major shareholder Agria who for their own reasons want as large a cash payout as possible. I think it is worth asking the question:

'What shape will PGW be in debt wise once the capital repayment goes ahead as planned?"

One way to answer that is to work out the 'minimum debt repayment time' (assuming all profits were directed to paying off debt) for the company.

	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019
Short Term Bank Loans	$29.709m	$47.702m	$35.573m	$57.195m	$36.623m	$26.719m	$30.806m	$3.920m
add Long Term Bank Loans	$111.500m	$62.000m	$65.000m	$66.000m	$97.511m	$110.925m	$149.205m	$31.742m
add Net Defined Benefit Liability (Pension Plan deficit)	$26.264m	$20.819m	$13.528m	$14.655m	$25.729m	$15.827m	$10.574m	$5.883m
add Employee Entitlements	$17.531m	$15.910m	$20.837m	$20.511m	$20.982m	$22.946m	$31.163m	$16.821m
equals Total Bank and Worriesome Liabiliities {A}	$185.004m	$146.431m	$134.938m	$158.361m	$180.845m	$175.967m	$221.748m	$58.366m
NPAT + Impairment & F.V. Adj. (declared) {B}	$27.013m (2)	$19.769m (1)(2)	$41.128m (2)	$32.634m (2)	$39.810m (2)	$44.358m (2)	$28.166m (2)	$7.187m (2)
Minimum Debt Repayment Time {A}/{B} (in years)	6.85	7.41	3.28	4.85	4.54	3.97	7.87	8.12

Notes

(1) Excludes Goodwill Write Down of $321.143m.
(2) Calculation of NPAT and 'Impairment & Fair Value Adjustments' (representing available cashflow for that year) is as follows:

FY2019: $4.000m+$3.187m = $7.187m
FY2018: $27.080m+$3.877m = $30.957m
FY2017: $46.311m-$1.953m = $44.358m
FY2016: $39.578m+$0.232m = $39.810m
FY2015: $32.611m+$0.023m = $32.634m
FY2014: $42.258m-$1.130m = $41.128m
FY2013: ($306.525m)+$321.143m+$5.151m = $19.769m
FY2012: $24.453m+$2.560m = $27.013m

I was under the impression that debt at PGW would come down as a result of selling the seed division. However, this analysis shows it has not happened in an 'ability to service the debt' sense. When the capital return has been washed out of the system, the balance sheet that is left is still highly indebted (an MDRT figure of 8.12). This is the worst figure on record. All the benefits of selling the seed division have been passed through to shareholders, while the underlying leveraged position of PGW has been weakened. I would consider an MDRT of anything between 2 and 5 qualifies as 'medium level debt', so something over 8 means.... They say we are in for a period of sustained low interest rates. It looks like PGWRR will need that.

In the meantime, excellent new Chairman with a refreshed board, sensible CEO, strong balance sheet and an excellent yield.

I can agree with only four out of five of your points Percy.

SNOOPY

[winner69]

In line with Snoops’ expectations?

http://nzx-prod-s7fsd7f98s.s3-websit...968/310237.pdf

[percy]

Guidance and dividend policy update is positive.
Pity I will miss today's agm.

[winner69]

Not many females present at an PGW ASM - an Indepedent Director and the notional HR person.

some say agriculture is a bloke thing ...hmmmm

http://nzx-prod-s7fsd7f98s.s3-websit...013/310239.pdf