PGW - PGG Wrightson

[Snoopy]

Help!!!!
Agria's CEO Adam Lai will oust their shareholders. 2 Years ago they write off 65 million land use rights. The arable land was purchased for sheep breeding 8 years ago. Lamb price demand is increasing in china. Therfore it is not acceptable that they wrote of 65 Million shareholder assets!
The CEO will do everything to destroy shareholder value.

Agrainvestor, at the moment this is only a proposal and there is no guarantee that the independent directors will accept the proposed offer of $US1.20 per ADR as reasonable. On the face of things it looks opportunisitic. The Agria share price only dipped below $US1.20 on 12th January 2016. Remember Agria will have problems with the listing authorities in the USA if their share price is below $1 for a sustained period. So floating the possibility of a takeover offer at $1.20 is one way to stop that.

Not sure you can object to a previous accounting period write down at this late stage. It is the sort of thing that you should have brought up at the relevant AGM at the time.

As a minority shareholder you are in for the ride now. What will happen, will happen. If you are pushed out, take your money and reinvest in PGW directly.

SNOOPY

[frostyboy]

At of 27 January, 6 commercial properties tenanted by PGG wrightson were listed for sale http://www.primecommercial.co.nz/com.../pgg+wrightson

I assume PGW are the owners. Could be a omen of PGW needing cash. Of course management would spin otherwise

[BlackPeter]

At of 27 January, 6 commercial properties tenanted by PGG wrightson were listed for sale http://www.primecommercial.co.nz/com.../pgg+wrightson

I assume PGW are the owners. Could be a omen of PGW needing cash. Of course management would spin otherwise

Not sure whether they currently own the properties - why would they sign a lease to rent agreement with themselves - and the offers talk about existing agreements?

As well - most companies get away from owning their own premises. specialists can look after these buildings much more efficiently - and the tax position is as well much more positive if you lease your premises instead of owning them.

Remember - lease rates are fully tax deductible; Owning a building is not.

[Queenstfarmer]

Not sure whether they currently own the properties - why would they sign a lease to rent agreement with themselves - and the offers talk about existing agreements?

As well - most companies get away from owning their own premises. specialists can look after these buildings much more efficiently - and the tax position is as well much more positive if you lease your premises instead of owning them.

Remember - lease rates are fully tax deductible; Owning a building is not.

PGW acquired these properties back in June 2014. AG Property Holdings Ltd. The properties listed for sale are just a few of the entire portfolio they purchased for $30 mil.

[Agrarinvestor]

Agrainvestor, at the moment this is only a proposal and there is no guarantee that the independent directors will accept the proposed offer of $US1.20 per ADR as reasonable. On the face of things it looks opportunisitic. The Agria share price only dipped below $US1.20 on 12th January 2016. Remember Agria will have problems with the listing authorities in the USA if their share price is below $1 for a sustained period. So floating the possibility of a takeover offer at $1.20 is one way to stop that.

Not sure you can object to a previous accounting period write down at this late stage. It is the sort of thing that you should have brought up at the relevant AGM at the time.

As a minority shareholder you are in for the ride now. What will happen, will happen. If you are pushed out, take your money and reinvest in PGW directly.

SNOOPY

Many Thanks for your answer. Writing land use rights to zero to the disadvantage of minority shareholders is ugly thing.
CEO is holding 80% of the voting rights.

Imagine they write to 50% of the Assets of PGW. One year later Adam Lai give you an offer for 20 cents.
As a PGW shareholder yiu should take close attention to this wrongfulness.
The same can happen to you. IF Adam Lai succeded with his maneuver he can fool you also.

[BlackPeter]

Many Thanks for your answer. Writing land use rights to zero to the disadvantage of minority shareholders is ugly thing.
CEO is holding 80% of the voting rights.

Imagine they write to 50% of the Assets of PGW. One year later Adam Lai give you an offer for 20 cents.
As a PGW shareholder yiu should take close attention to this wrongfulness.
The same can happen to you. IF Adam Lai succeded with his maneuver he can fool you also.

Can't really comment on the story in Agria (don't follow them), but what I've seen so far of Alan Lai and Agria's dealings with PGW - everything I have seen so far appears to be above board. And remember - PGW would not be around today if Agria would not have paid 60 cents per share at the last capital raising (and their average share price paid is still well above that mark). So - I think PGW does owe Agria and Alan Lai. Would not justify them to do dodgy things, but as i said, I don't see any evidence for that either.

Related to the perceived low ball offer for Agria: Well, I guess everybody is allowed to make low ball offers for anything ... and I have no idea whatsoever, what the take over rules are on the NYSE. I don't know either whether the price you suggested ($1.20) is undervaluing the company or not.

However - PGW is listed on the NZX. So, if we assume for arguments sake that Alan Lai would want to play a game as you described with PGW, than he first would need to convince the independent directors that his offer is fair and reasonable. Otherwise he would not get their recommendation for this move. Than he would need to convince at least 80% of the remaining share holders (he is currently just holding 50%) that his offer is a good and fair one (nobody forces them to sell).

Only than could he use the rules for compulsory acquisition of the remaining 10% of shares - and even than would these remaining share holders have the right to call for an arbitration panel if they don't like the price offered.

The other thing is - what benefit would he have of turning PGW into a 100% Chinese company? Do you think that this would help them in the NZ market place?

So - I guess I wouldn't be too concerned for PGW share holders ... and as indicated, what happens with Agria would probably belong into to some different thread.

[Beagle]

Very well said BP.

[Snoopy]

So - I guess I wouldn't be too concerned for PGW share holders ... and as indicated, what happens with Agria would probably belong into to some different thread.

I for one am very grateful for Agrainvestor keeping us informed of what is happening at Agria on this thread. Agria at last reporting date had 5 directors in total, three of whom were independent.

Joo Hai Lee 59 Independent Director
Sean Shao 58 Independent Director
Wah Kwong Tsang 63 Independent Director

The last name on that list should be familiar, because he is also a director of PGW! Consequently I think it will be highly relevant to this thread exactly what Wah Kwong Tsang signs off as the 'fair value' of PGW today in any independent report, valuing Agria.

Agria's external turnover for FY2015 (YE 30th June, same balance date as PGW) was $US944.714m. Using the 30th June 2015 NZD to USD exchange rate:

$USD944.714m x 1.462 NZD/USD = $NZD1,381.2m

Now, turnover for PGW that year was $NZD1,202.835. (Note that PGW is fully consolidated into the accounts of Agria). By turnover then, PGW makes up

$NZD1,202.835/ $NZD1,381.2m = 87% of the activity of Agria.

So you can see that Agria is largely a leveraged US listed proxy for direct investment in PGW. Accordingly, whatever goes on at Agria is highly relevant to PGW and IMO discussion on Agria should not be on a separate thread.

SNOOPY

[Agrarinvestor]

@Snoopy,
thanks. As you know I'm invested since years in Agria. My holding was 55.000. I reduced it to 10.000 because of the land use right write of.
>>land use rights and non-current prepayments of $57.0 million made in 2013<<

CEO Adam Lai has not explained us why this land use right are worth nothing!! It's a crime.
He has misused his voting rights and he has a rope team as independent directors.
My investment has a large china stake. I'm not a friend of the all chinese are criminals theory.
But these chinese CEO's misuse their voting power to the disadvatage of minority shareholders.
It's my third Squeeze Out.
Please help and raise some attention to New Zealands press. I don't see a real chance for PGW's shareprice to raise in the future.
It will always be bonded to the level of dividend they can generate.

[Beagle]

@Snoopy,
thanks. As you know I'm invested since years in Agria. My holding was 55.000. I reduced it to 10.000 because of the land use right write of.
>>land use rights and non-current prepayments of $57.0 million made in 2013<<

CEO Adam Lai has not explained us why this land use right are worth nothing!! It's a crime.
He has misused his voting rights and he has a rope team as independent directors.
My investment has a large china stake. I'm not a friend of the all chinese are criminals theory.
But these chinese CEO's misuse their voting power to the disadvatage of minority shareholders.
It's my third Squeeze Out.
Please help and raise some attention to New Zealands press. I don't see a real chance for PGW's shareprice to raise in the future.
It will always be bonded to the level of dividend they can generate.

I've got burned before as a minority shareholder in a Chinese majority owned listed NZX company so I'm a little concerned by what you've said especially given the direct connection with the directors involved. Yet another fall in the GDT auction price when we are supposed to be experiencing a recovery is frustrating.