PGW - PGG Wrightson

[dumbass]

How do the fundamentals for the PGW empire stack up right now? I'm not too clear about what the whole silver fern thing means, but I'm actually tempted to have a stab with PGW approaching support.

NZS made a new low unfortunately, no touching with a barge pole.

where you do you see support level ?

[duncan macgregor]

where you do you see support level ?

There is no support level with a company that has changed as much as PGW. Its a new company in new fields completely different to what it was before norgate got involved. The sp has soared then started to crash, the bottom is anyones guess. It requires some good news to turn it around which seems unlikely in the short term. I would hazard a guess and say into the dollar thirties in the next six months. Macdunk

[AMR]

where you do you see support level ?

At about the1.47-150 mark.

[dumbass]

from a ta perspective

long term rising trendline confirmed.

massively oversold rsi.

diverging rsi

key support line at 170.

if 150 survived another test looks like a possible buy with a tight stop below the trendline .

[Xerof]

Norgate should be eternally grateful to his fair-weather bankers for pulling the plug on this marriage made in hell.

The last thing any company needs right now is a share of a debt laden, razor-thin margin making business in a sunset industry. Best they let it fall over, and let the other players pick up the pieces to rationalise this industry

[macduffy]

Norgate should be eternally grateful to his fair-weather bankers for pulling the plug on this marriage made in hell.

The last thing any company needs right now is a share of a debt laden, razor-thin margin making business in a sunset industry. Best they let it fall over, and let the other players pick up the pieces to rationalise this industry

I don't think it's a sunset industry but rather that the sun is rapidly setting on the way that the industry is structured.

[Snoopy]

From an operational perspective the Craig Norgate (Chairman) and Tim Miles (Managing Director) 'show' gave a bullish outlook.

With the first quarter results in, Rural Supplies and Fruitfed are well ahead of budget. This is thanks largely to increased demand for agricultural chemicals and seeds. The drought conditions earlier in the year made many farmers try the supplementary animal feed molasses based liquid. It worked so well that many farmers are continuing to use molasses now the drought is over.

The pumping division is either 'going great guns' or 'irrigation booming', depending on whether the dairy farm conversions and viticulture ventures go for a high pressure or a low pressure system respectively.

Finance on a quarter to quarter annual comparative basis is benefitting from the larger capital base built up over the year. The drop in the exchange rate can only work for farmers (and PGW) over the coming year. The one negative was real estate. This had been up over 70% in FY2008. But farm property sales have plunged this quarter to be 'well below budget', although PGW's market share at 30% has been maintained. Finance is anecdotally starting to become a problem.

The full year profit projection must be tempered by the uncertainty of autumn seeds and cow dairy herd sales which traditionally drive the full year result, and most of these sales do not occur until the second half. Given the turbulent world financial conditions, Norgate has maintained the PGW projected profit at $46m-$51m for PGW's underlying operations for FY2009.

There is likely to be a one off write-down on the carrying value of New Zealand Farming Systems (NZS), in which PGW has an 11.2% stake. But this loss is likely to be offset by the gain from selling Wrightson's wool handling business into 40% owned 'The Wool Company'. It was clear that a 'capital gain bonus' to PGW from managing NZS for this year is not likely. The NZS share price would have to average $1.75 from April 2009 to June 2009 for any such bonus to be paid to PGW.

Directors Sam Maling and Brian Joliffe made impassioned pleas for their re-election,as representatives of cornerstone 21.58% shareholder Pyne Gould Corporation. They did make it clear that both supported the Silver Fern Meats transaction. But they also made it clear that should PGCs plan to get a banking licence proceed, the reserve bank would probably demand PGC divest their interest in PGW.

There was a question from the floor as to how ''green" the company was. Norgate replied that he had been waiting for two years for somebody to ask him that as he had sympathy with certain green issues, even if the greenwill sometimes got ahead of the scientific evidence. He said that being a supplier, PGWs own carbon footprint is relatively low. MD Tim Miles jumped in and admitted PGW are not as green as they could be. Road miles travelled by reps may be one area where they can reschedule trips and/or use greener vehicles to reduce the PGW company carbon effect.

Contrary to what you might read in the 'official' AGM reports, Norgate is pulling out all stops to ensure the PGW/SilverFern joint venture meat merger goes ahead. Missing the 30th September 2008 deal funding target means that PGW are now incurring 'interest penalties' until such funding is repackaged and in place. And if the deal *is* called off, PGW will be up for a penalty break free.

Norgate was questioned extensively on the rationale behind the Silver Fern deal. He said it was driven largely by PGW customers the biggest proportion of whom are sheep and beef farmers, as was the 'Wool Partners' deal. He is as passionate as ever about the consumer driven plate to pasture strategy (as opposed to the pasture to plate supplier driven outlook). And farmers, after years of inactive frustration, were looking for a restructuring catalyst like PGW. The meeting closed with Norgate promising to announce new procurement and cash management initiatives in November.

SNOOPY

discl: hold PGW

[Dr_Who]

Expect capital raising to acquire Silver Fern in the near future?

[forest]

I am wondering what this delay or cancellation of the deal with silver ferns is costing PGW. I understand there is a penalty interest charge because of delayed settlement (on perhaps as much as $145mil)and if the deal would be cancelled then you would expect a fee for breaking an unconditional contract.
Further you think there would be legal fees etc.
Could bite in PGW profits anybody care to put some numbers on them?

[Snoopy]

I am wondering what this delay or cancellation of the deal with silver ferns is costing PGW. I understand there is a penalty interest charge because of delayed settlement (on perhaps as much as $145mil) and if the deal would be cancelled then you would expect a fee for breaking an unconditional contract.
Further you think there would be legal fees etc.
Could bite in PGW profits anybody care to put some numbers on them?

I will have a guess. $145m was due on the date of settlement (the missed date of 30th September), while the rest of the $220m ($75m) was due to be settled on 1st March 2009 *plus an interest rate of 10% on the outstanding balance*.

If none of the money is paid up until 1st March 2009, that means interest at 10% on the whole of the outstanding balance for 5 months:

0.1x $220m x 5/12= $9.2m

Provided PGW stitch this deal together, I would predict minimal additional legal fees.

There will be zero additional legal fees if PGW break the contract as well, for what happens in that event is already in the existing contract. There will however be compensation payable.

However, I wouldn't bet on the deal not going ahead. Norgate sounded pretty determined to get the deal done in some form. He used the phrase 'our word is our bond' when speaking on behalf of the board. If Norgate doesn't make the deal, then his deal making reputation will be in tatters. So I think provided the deal can be done using the overseas financiers, this Silver Fern Meats deal *will* go through.

The completely separate deal with cornerstone shareholder PGC becoming a bank throws another ingredient into the mix. If PGC unload their 21.6% stake to one buyer, that buyer will be obliged to make a takeover offer for the rest of the shares in PGW.

SNOOPY

discl: hold PGW