PGW - PGG Wrightson

[RTM]

That 7.5cps divvy sounds great.
How come they get 10x the rest of us ?

Is the divie that high ? 0.75c per share according to NZX. ?

[waikare]

That 7.5cps divvy sounds great.
How come they get 10x the rest of us ?

Perhaps that should read .75 cps

[Snoopy]

Agria selling down

http://www.sharechat.co.nz/article/f...rom-agria.html

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

-------

"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."

-------

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

[janner]

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

-------

"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."

-------

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.

Yes. Food for thought.. Who will end up at the dining table ?.
Also is it worth accepting the invitation ?.

[Snoopy]

Yes. Food for thought.. Who will end up at the dining table ?.

I don't think it is any secret that Elders are interested in PGW, but they don't want to pay a big premium for a controlling stake. A lot of that potential premium will be gone if the Seed Business sale goes through. Elders would have to make an offer to all shareholders if they want to own more than 20% of the 'PGW Rural Rump' that remains. A Cushing/ Ngai Tahu alliance could ensure that PGW remains listed in NZ, even if Elders snares a controlling shareholding.

Also is it worth accepting the invitation ?.

Invitations are always price sensitive. The Cushings think that 49c is an acceptable price to gain a meaningful seat at the table.

SNOOPY

discl 1: Bought some more shares at 49c myself the other day (albeit ex dividend).
discl 2: Am not related to the Cushings.

[Balance]

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

-------

"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."

-------

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

~~~~~~~~~~~~~

Agria selling is no big surprise indeed as the company has been in the hands of the bankers for quite a while - reason why Agria put up its stake in PGW for sale in 2017 in the first place.

Looks to me like Agria has sold the $8m worth of PGW's stake to cover various 'operating' expenses (fines, legal, admin, fees etc) which is why it needs the permission of the banks.

There have been two delays to the sale of the seeds business - (i) OIO investigation and subsequent censure of Agria as an 'unfit' shareholder over its disgraceful conduct in its US listing (false accounting and market manipulation) and (ii) Commerce Commission competition investigation into the sale of the Seeds Business.

~~~~~~~~~~~~~

Interesting & good thought about Ngai Tahu & Cushing teaming up - possible but the penalty for collusion without market disclosure (formal or informal) is pretty severe these days with the FMA looking to make examples of their vigilance and muscle! Also Agria would be wary of selling a stake which could prove to be a hindrance later to it selling its controlling stake in PGW.

More interesting to me is Cushing buying - I think it is opportunistic and where the willy old fox puts his money, it is usually right to join him!


~~~~~~~~~~~~~~~~

OIO approval is the big issue now facing PGW - there are some quarters objecting to the sale of this most 'precious' IP built up over decades but the Commerce Commission finding that there is sufficient competition in the industry pretty much lays that argument to rest.

Agria will be hoping like mad that the approval comes through so that Cushing does not get to settle the $8m purchase?

[Balance]

I don't think it is any secret that Elders are interested in PGW, but they don't want to pay a big premium for a controlling stake. A lot of that potential premium will be gone if the Seed Business sale goes through. Elders would have to make an offer to all shareholders if they want to own more than 20% of the 'PGW Rural Rump' that remains. A Cushing/ Ngai Tahu alliance could ensure that PGW remains listed in NZ, even if Elders snares a controlling shareholding.



Invitations are always price sensitive. The Cushings think that 49c is an acceptable price to gain a meaningful seat at the table.

SNOOPY

discl 1: Bought some more shares at 49c myself the other day (albeit ex dividend).
discl 2: Am not related to the Cushings.

Agree - Happy to join Cushing at the dining table.

[Snoopy]

Interesting & good thought about Ngai Tahu & Cushing teaming up - possible but the penalty for collusion without market disclosure (formal or informal) is pretty severe these days with the FMA looking to make examples of their vigilance and muscle! Also Agria would be wary of selling a stake which could prove to be a hindrance later to it selling its controlling stake in PGW.

I think David Cushing and Ngai Tahu's Trevor Burt know each other, through representing family/whanau interests as fellow investors in PGW. I wasn't implying any collusion in my comment. In a takeover offer, shareholders would be expected to act independently. But that doesn't stop two or more independent shareholders coming to the same view.

If 10% of the shares on issue or more vote against a full takeover offer, then a full takeover cannot proceed. But that wouldn't stop Agria selling their PGW stake. That transaction would hand effective control to the buyer of the Agria stake. Whoever the buyer was would be forced to offer all other shareholders the same dollar amount per share as they offered Agria, because of the NZ Takeover code. There is a strong chance the buyer would gain 50% of the shares on issue from such an offer. And that would give undisputed control. But as long as more than 10% of shares are not fed into such an offer that still means that PGW remains listed.

SNOOPY

[Snoopy]

Agria selling is no big surprise indeed as the company has been in the hands of the bankers for quite a while - reason why Agria put up its stake in PGW for sale in 2017 in the first place.

Hmmm, I don't recall Agria ever putting their PGW stake up for sale.

Or are you referring to the 'capital review' initiated by PGW to look at the capital needs of the company going forwards? -That was where the Danish DLF Seeds offer for the PGW seed business came from. So your argument Balance is that the 'capital review' was really a sham sales process in disguise?

SNOOPY

[Snoopy]

There have been two delays to the sale of the seeds business - (i) OIO investigation and subsequent censure of Agria as an 'unfit' shareholder over its disgraceful conduct in its US listing (false accounting and market manipulation) and (ii) Commerce Commission competition investigation into the sale of the Seeds Business.

OIO approval is the big issue now facing PGW - there are some quarters objecting to the sale of this most 'precious' IP built up over decades but the Commerce Commission finding that there is sufficient competition in the industry pretty much lays that argument to rest.

IMO the 'competition issue' and the 'overseas ownership' issue are separate arguments.

If:

1/ the PGW Seeds IP is regarded as a 'taonga of the nation' and
2/ there is no counter benefit to the nation to be gained in selling it overseas,

then approval for the PGW Seed Division Sale will not be forthcoming by the OIO. That's the way I see it anyway. Plan B would be to tender the Agria stake to NZ institutional shareholders.

SNOOPY