PGW - PGG Wrightson

[percy]

Details of the transactions or other events requiring disclosure: On 14 December 2022, Elders agreed to
acquire 8,526,245 ordinary shares in PGW from BCA New Continent Agri Hldg. Limited by way of an off
market trade for consideration of NZ$4.35 per share (being aggregate consideration of
NZ$37,089,165.75) with settlement to occur on 16 December 2022.

[Snow Leopard]

Details of the transactions or other events requiring disclosure: On 14 December 2022, Elders agreed to
acquire 8,526,245 ordinary shares in PGW from BCA New Continent Agri Hldg. Limited by way of an off
market trade for consideration of NZ$4.35 per share (being aggregate consideration of
NZ$37,089,165.75) with settlement to occur on 16 December 2022.

11.295% stake.
Will they want more or just blocking ?

[Snoopy]

Details of the transactions or other events requiring disclosure: On 14 December 2022, Elders agreed to
acquire 8,526,245 ordinary shares in PGW from BCA New Continent Agri Hldg. Limited by way of an off
market trade for consideration of NZ$4.35 per share (being aggregate consideration of
NZ$37,089,165.75) with settlement to occur on 16 December 2022.

"BCA New Continent Agri Hldg. Limited" is the Chinese government. The last declaration from these guys was on 25th July 2022, when their holding reduced from 9,758,714 shares (12.928%) to 9,000,915 shares (11.924%). The sale of 8,528,245 shares to Elders announced today means there are

9,000,915 - 8,528,245 = 472,670,

or just 0.626% of the shares in the company still in Chinese government hands. Or are they? I guess the imminent SSH declaration from "BCA New Continent Agri Hldg. Limited" will answer that question.

SNOOPY

[percy]

SHAREHOLDER NUMBER OF SHARES HELD % OF SHARES HELD as at 1st August 2022
1. Agria (Singapore) Pte Limited 33,463,399 44.33
2. BCA New Continent Agri Hldg. Limited (BCA) 8,993,305 11.91
3. HSBC Nominees (New Zealand) Limited 1,489,589 1.97
4. FNZ Custodians Limited 973,536 1.29
5. New Zealand Depository Nominee Limited 936,608 1.24
6. Forsyth Barr Custodians Limited 689,547 0.91
7. Accident Compensation Corporation 579,446 0.77
8. Custodial Services Limited 508,379 0.67
9. Nicolaas Johannes Kaptein 500,962 0.66
10. Citibank Nominees (New Zealand) Limited 493,956 0.65
11. JBWERE (NZ) Nominees Limited 470,443 0.62
12. Elizabeth Beatty Benjamin & Michael Murray Benjamin
(Michael Benjamin Family a/c)
300,000 0.40
13. H&G Limited 295,000 0.39
14. Totara Grove Investments Limited 280,000 0.37
15. Ian David McIlraith 230,000 0.30
16. David Mitchell Odlin 214,400 0.28
17. Leveraged Equities Finance Limited 204,217 0.27
18. Robert Vincent Cottrell & Lesley Maureen Cottrell 202,898 0.27
19. GMH 38 Investments Limited 200,000 0.26
20. Colin Hugh Notley & Jan Marie Notley 175,000 0.23

[percy]

11.295% stake.
Will they want more or just blocking ?

I would think they would want more.

[Snoopy]

SHAREHOLDER NUMBER OF SHARES HELD % OF SHARES HELD as at 1st August 2022
1. Agria (Singapore) Pte Limited 33,463,399 44.33
2. BCA New Continent Agri Hldg. Limited (BCA) 8,993,305 11.91

Ah thanks for that Percy. I hadn't realised that the time dated BCA shareholding disclosure in the Annual Report for FY2022 was ahead of the last disclosure to the NZX on 25th July 2022. This means that the number of PGW shares that BCA retains that are available for sale reduces to:

8,993,305 - 8,528,245 = 465,060, or 0.616%

It is quite likely they have already been sold, but the imminent substantial shareholding notice from BCA will confirm that.

The buyer, Elders of Australia, has been linked to takeover rumours swirling around PGW back in 2018.

https://www.afr.com/street-talk/elde...0180509-h0ztt9

Subsequent to this the seed business part of PGW was sold. So Elders coming onto the share registry now makes more sense, because they were never interested in the seed part of the PGW business anyway. In relative terms, PGW would now be a smaller mouthful to swallow for Elders. They may not need a partner with which to structure such a deal.

Nevertheless a takeover of PGW would not be possible, without the agreement of defacto controlling shareholder Alan Lai, or Mr. Lai Guanglin, as he is more commonly known in Asia, and his now delisted company Agria holdings . So what has Mr Lai been up to of late?

It turns out that being the controlling shareholder of Hong Kong listed 'China Pipe Group Limited', he has just renewed a $US10m loan from that company.

https://www1.hkexnews.hk/listedco/li...2042201592.pdf,

until 31st July 2025. This, plus the capital return on disposal of the seed business, should have strengthened the Lai/Agria finances to the point where he is under no pressure to sell that Agria PGW stake. But the 5.5% interest rate he has agreed to pay is above 'bank rates' in Hong Kong. Security for the loan is 20% of the shares in Agria Asia Investments Limited (AAIL) (p5 of above reference).

"AAIL is indirectly holding a share equity investment in an agricultural enterprise in New Zealand (which is PGW) through Agria (Singapore) Pte. Ltd. (“Agria Singapore”), the only and wholly-owned direct subsidiary of AAIL."

"According to (i) the latest consolidated management account of Agria Singapore for the nine months period ended 31 March 2022 and (ii) the latest unaudited consolidated financial statement of AAIL for the nine months period ended 31 March 2022 provided by AAIL:-

(a) the net assets value of Agria Singapore as at 31 March 2022 is NZD66.1 million (equivalent to approximately US$45.6 million);
(b) the net assets value of AAIL as at 31 March 2022 is approximately US$172.5 million."

The PGW share price closed at $4.43 on 31-03-2022. With Agria Singapore declaring a shareholding of 33,463,399 shares, this shareholding was worth:

$NZ4.43 x 33,463,399 = $NZ148,242,857.

Yet we are told the net asset value of Agria Singapore, which I believe holds PGW shares as their only substantial asset, is only $66.1m. If my maths is right, this indicates a substantial quantum of borrowed funds on the Agria Singapore balance sheet: $148.2m - $66.1m = $82.1m.

Of course over the last twelve months, PGW has paid a substantial dividend to Agria Singapore:

33,463,399x($0.14+$0.16) = $10.0m

That would be cashflow neutral or better to Agria Singapore, provided borrowing interest rates were less than: $10.0m/$82.1m = 12.2%. Since interest rates for borrowing by Mr. Lai Guanglin are well under that figure, it looks like dividends from PGW would have to halve before Mr. Lai Guanglin would come anywhere near any financial strain. Thus I see no need for Mr. Lai Guanglin to come under any pressure to accept a 'cheeky' offer for the PGW shares from Elders that he indirectly owns via Agria Singapore.

SNOOPY

[Snoopy]

The buyer, Elders of Australia, has been linked to takeover rumours swirling around PGW back in 2018.

https://www.afr.com/street-talk/elde...0180509-h0ztt9

Subsequent to this the seed business part of PGW was sold. So Elders coming onto the share registry now makes more sense, because they were never interested in the seed part of the PGW business anyway. In relative terms, PGW would now be a smaller mouthful to swallow for Elders. They may not need a partner with which to structure such a deal.

There was a follow up to the announcement yesterday, at the Elders AGM today. From the Chairman's address:

"The business development pipeline for the coming year, is encouraging with numerous successful businesses expected to join Elders in the next 12 months and furthering our growth."

"As announced yesterday, to further our geographic diversification, we have also taken an 11.3% interest in PGG Wrightson Limited, the New Zealand based rural services business, which was acquired by private sale. Elders does not intend to initiate a proposal to acquire control of PGW, however it does support our diversification strategy as part of our pureplay agribusiness."

So 'no bid' is to be brought to the table for other PGW shareholders.

SNOOPY

[sb9]

There was a follow up to the announcement yesterday, at the Elders AGM today. From the Chairman's address:

"The business development pipeline for the coming year, is encouraging with numerous successful businesses expected to join Elders in the next 12 months and furthering our growth."

"As announced yesterday, to further our geographic diversification, we have also taken an 11.3% interest in PGG Wrightson Limited, the New Zealand based rural services business, which was acquired by private sale. Elders does not intend to initiate a proposal to acquire control of PGW, however it does support our diversification strategy as part of our pureplay agribusiness."

So 'no bid' is to be brought to the table for other PGW shareholders.

SNOOPY

Thanks for the update, while they may not immediately looking to acquire PGW, it takes away further selling pressure from their stake. We might see the sp get into $5 s range soon purely due to this transaction as it emphasizes long term potential of PGW.

[Snoopy]

"BCA New Continent Agri Hldg. Limited" is the Chinese government. The last declaration from these guys was on 25th July 2022, when their holding reduced from 9,758,714 shares (12.928%) to 9,000,915 shares (11.924%). The sale of 8,528,245 shares to Elders announced today means there are

9,000,915 - 8,528,245 = 472,670,

or just 0.626% of the shares in the company still in Chinese government hands. Or are they? I guess the imminent SSH declaration from "BCA New Continent Agri Hldg. Limited" will answer that question.

'Question answered' by the 16th December NZX announcement today. The 472,670 shares 'not acquired' by Elders were disposed of between 25 July 2022 and 24 August 2022 by selling on market at an average share price of:

NZ$2,090,424.15 / 472,670, = $4.42

So 'BCA New Continent Agri Hldg. Limited' have departed the share register completely. It is interesting to see that Elders paid a little less per share to acquire the remaining Chinese government shares ($4.35).

It was once said that western style investment managers like to shunt their shareholdings around on waves of greed and fear. Whereas the Chinese know how to recognise a good company, buy in, and stay as owners forever. So now we know how long 'forever' is. "BCA New Continent Agri Hldg. Limited" (actually their predecessor company) first appeared on the PGW share register as a 'substantial shareholder' on 17th April 2020. They exited the company on 16th December 2022. So "forever" = "two years and eight months".

SNOOPY

[Snoopy]

Memories of a misspent youth - spent many days at the Wrightsons Yearling Sales at Trentham. The days when Bart and Nelson would zillions on the beautiful young athletic horses. wrightsons were glamourous and prob made zillions themselves as well. In those days I didn't care about such things but Wrightsons meant something - oh no not a brand.

Well they stuffed that up and no longer run the premier sales in nz. Dabble in the harness horse bit though.

My grandad always raved on about how the man from Wrightsons helped him out with finance - all part of a good brand. But no more

The above post was from nine years ago, but you are still a horse man Winner? I noticed in the very fine print on AR2020 p39 that he PGG Wrightson standardbred division had been closed. The end of 100 years of history. No mention of this in the main text of the Annual Report. Not even an announcement to the NZX!

Now the 'Standardbred Division', part of Livestock, had the monopoly on selling harness horses in New Zealand. In fact, if you go to the half year report for the 2017 financial year, on page 7, there is a glowing write up on the business.

"While the organisation’s roots have been intertwined with the horse industry for over 100 years (back to the early days of the Canterbury Horse Bazaar and later through the Trentham Thoroughbred Sales) it wasn’t until 1987 that a Standardbred Division was established."

"The Standardbred Division specialises in the trading of harness horses. The team has a dedicated staff of five, collectively with over 125 years’ experience at PGW between them. They have provided a solid and consistent service delivery for 30 years and as a result they are well respected in the industry. Prior to 1987 there were seven organisations selling Standardbred horses throughout New Zealand, but since 1991 PGW have been the sole auctioneer to the industry."

Wow! That 'm' word I mentioned before. Monopoly means no competition. What a money spinner it must have been!

“The team experiences an unusual combination of excitement and angst on the three big days of the year. We need to get it right, or it impacts significantly on the annual performance of the division and so far we have. In the last 30 years, the team have catalogued and sold over 20,000 Standardbred horses."

"When our division started the pedigrees in the catalogue were handwritten, but over the last 30 years our team has developed an electronic database of Standardbred race records and pedigrees. This database is unequalled in the country, so we consider it one of our most valued assets.”

Two years down the track and this 'valuable asset' of race records and pedigrees became worthless!

I thought it must have been a Covid related thing. But the last sales under the PGG Wrightson yearly sales banner was on February 2018

https://www.aldebaranpark.com/pages/...ch-new-zealand

And it looks like they only had one horse to sell - Aldabaran Tess! Looks like it was left to Mark 'the dude' Dewdney to shut the stable door after all his horses had bolted. Anyone have any idea what happened?

Those earthquakes we have been having in the North Island for the last few weeks Winner: Your old grandad, turning in his grave?

SNOOPY