PGW - PGG Wrightson

[Nevl]

Hope you all stocked up when you had the chance!! See post 27/12

[winner69]

As at June equity was $480m and 'core debt' was $312m. Core debt excludes PGGW Finance which has bank debt of another $140m

Article in The Herald suggests PGW core debt now bout $400m and $180m needed to be refinanced in next month or 2. That Taylor guy from Macquaries didn't seem too impressed with state of play and suggest a pretty dilutive capital raising is likely ..... just another analyst rave or one that might actually be saying something the company doesn't really want to hear

Quote from http://www.nzherald.co.nz/business/n...0555525&pnum=0

In the wake of its rapid expansion PGG Wrightson and its 30 per cent owner, the Craig Norgate and McConnon family-owned Rural Portfolio Investments, have been talked about as an example of a group that is relatively highly geared.

A number of analysts have raised concerns about PGG Wrightson's debt levels, including Macquarie Equities' Lyall Taylor, who noted in December that its core debt was likely to approach $400 million this year and that it needed to refinance $180 million in debt by April, "against a backdrop of tight credit and earnings momentum slowing to a splutter".

"We see an increasing risk PGGW will need to undertake a dilutive equity raising."

PGG Wrightson chief executive Tim Miles declined to comment, citing the proximity of the company's half-year result later this month.

Taylor also raised concerns about the debt levels at RPI which relies on PGG Wrightson's dividends to service the interest obligations on the $102.5 million in redeemable preference shares it has on issue, $44.6 million of which will also mature in April.

There will, no doubt, be considerable interest in how PGG Wrightson and RPI negotiate the next few months.

[duncan macgregor]

Right now in the short term extreme high risk of more down side. This companies prospects have been on a roller coaster ride on the way down with more downside expected than upside. Farmers are struggleing in this environment, PGW follow on from there. Macdunk

[winner69]

Right now in the short term extreme high risk of more down side. This companies prospects have been on a roller coaster ride on the way down with more downside expected than upside. Farmers are struggleing in this environment, PGW follow on from there. Macdunk

If RPI rely on a PGW dividend to pay the interest on its debts then this all could be a pack of cards then MacDunk?

[Mick100]

pgw don't seem to be having difficulty raising funds in this environment
Sheep and beef farmers (PGW's mian clients) are doing better this yr than last yr as far as prices for their production go

===============================================


PGW
23/12/2008
GENERAL

REL: 1433 HRS PGG Wrightson Limited

GENERAL: PGW: PGG Wrightson Finance Offer Closes Oversubscribed

Announcement
23 December 2008

PGG Wrightson Finance Offer Closes Oversubscribed

PGG Wrightson Finance Limited ("PGG Wrightson Finance") is pleased to
announce that its offer of Secured Bonds has closed oversubscribed with the
Company today allotting the maximum $100 million of Secured Bonds available
under the offer (the "Offer").

The interest rate for the Secured Bonds, which is fixed for their term, was
set on Monday 22 December 2008 at 8.25%.
Mark Darrow, head of PGG Wrightson Finance was delighted with the demand for
the Offer commenting "the level of support we received from brokers,
financial advisers and their investors together with our own shareholders and
clients is a sound endorsement of the quality and reputation of PGG Wrightson
Finance and our position as a leading rural financier in New Zealand".

The proceeds from the Offer will supplement the Company's debenture
programme, which grew more that $80 million this calendar year, and
additional wholesale funding lines that were secured from key banking
partners.

Mr Darrow further commented that "the Company is pleased to be going into
2009 with substantial cash resources, and with a mandate to further increase
our support for the rural community when other rural financiers have become
more constrained due to existing exposures and/or liquidity concerns".

"We would like to acknowledge the Lead Manager and Organising Participant to
the Offer, Forsyth Barr Limited and the Underwriter, Forsyth Barr Group
Limited. We would also like to recognise the support of our shareholders and
clients in achieving this outcome" Mr Darrow concluded.

PGG Wrightson Finance's Secured Bonds will be quoted on the NZDX on Wednesday
24th December 2008 under the security code "PWF030". The Secured Bonds will
join the Company's two other bond issues currently trading under the security
codes "WFL010" and "WFL020" which will, from tomorrow the 24th December 2008,
trade as "PWF010" and "PWF020" respectively.

-Ends-

[southernerx]

pgw don't seem to be having difficulty raising funds in this environment

Their finance company subsidiary has been able to raise money easily thanks to a government guarantee - thats very different from the parent company finding more money. They have separate balance sheets and limited ability to fund each other.

[Snoopy]

Article in The Herald suggests PGW core debt now bout $400m and $180m needed to be refinanced in next month or 2.

The article you quoted said that debt might approach $400m "this year" Winner. I reckon we still have nearly 11 months to run. The article said nothing about the figure being $400m now.

Nevertheless the article was enough to get me scurrying to my most recent PGW annual report, FY ended June 2008. Under "Note 4, Segmented Reporting", it showed core Rural Services debt to be $483m. So my reading of this is that debt is currently being *reduced* at PGW right now. Not increased as a casual read of the Herald article might have the reader imply.

As for needing to refinance $180m by April 2009, I would like to know where that figure comes from. Even if true, as recently as August 2008, PGW were planning an debt/equity raising of $220m to acquire a half stake in Silver Fern Farms. So PGW must have been gauging the banks and the markets as a way of raising a similar quantum of funds for at least six months no, even though that particular $220m is no longer needed.

If we look at note 15 on "Cash and Bank Facilities", we note that "Current bank facilities" total $174.3m (is that where the $180m in the Herald article comes from?). Are these current bank facilities renegotiated every year? It all sounds dramatic, until you read that in FY2007 current group bank facilities were $242m. Yet under that strain (?) just one year ago PGW arranged for increased term debt from $74m to $304m. And as at the last balance sheet date, the PGW group was still $130m under their pre-approved debt ceiling, *excluding* the $39m in 15th August to 15th May seasonal facilities. So where is this ‘pressure’ on PGW coming from to renegotiate the full $180m?

Dairy may be in some trouble as unrealistic expansionary expectations are deflated. There will be a rub off in PGW real estate through reduced farm sales. But dairy farmers are not the core of PGW customers. As Mick has noted, those are sheep and beef farmers. And for them, this year is shaping up as rather better than last.

SNOOPY

Discl: hold PGW

[duncan macgregor]

Snoopy, Dairy has taken a massive hit. Wool and beef are down farmers are finding it tough. When that happens they stop buying and tread water to survive. PGW depends on farm expenditure to survive. PGW must end up with a reduced profit level in the short term.
I would think the share price would trail farm incomes up or down by about six months. Macdunk

[winner69]

The article you quoted said that debt might approach $400m "this year" Winner. I reckon we still have nearly 11 months to run. The article said nothing about the figure being $400m now.

Nevertheless the article was enough to get me scurrying to my most recent PGW annual report, FY ended June 2008. Under "Note 4, Segmented Reporting", it showed core Rural Services debt to be $483m. So my reading of this is that debt is currently being *reduced* at PGW right now. Not increased as a casual read of the Herald article might have the reader imply.
SNOOPY

Discl: hold PGW

PGW presentation June results had a slide that said core debt was $312m (which excludes PGGW Finance which has bank debt of another $140m) .... thats PGW figures

Is Taylor from Macquaries saying that this the $312m is increasing to $400m then? Would have thought that 'core debt' was 'core debt'

Shouldn't question analysts ... or did the papers just intepret it all wrong

[micket]

also expect some deeply discounted equity propositions for dairy set ups in the SI. if these are cheap enough and you can stand treading water for a couple of years you should be well rewarded. Im talking 1000 for GOOD cows and 25000 max per ha for converted well irrigated ground.