Rural Portfolio Capital Limited (RPC010) - Preference Shares

[Alan3285]

RPI/RPC was set up as a vehicle to own a controlling interest in PGW.

Some of the owners capital, more borrowed in the RPI bonds. Interest to be paid out of PGW dividends.

This works out nicely. Bonds taken up.

PGW share price trades $1.50 +/- $0.20. PGW dividends pay RPI issue interest. All happyhappy joyjoy.

SFF merger proposed.

PGW share price hits $2.20

PGW/SFF merger falls over. World financial crisis begins. Merriment and jollification all round.

RPI bond issue matures. RPC bond issue made. At higher interest rate.

PGW makes dividend shares in lieu unless shareholder opts out. Oh dear ! Problem for RPC.

PGW suspends dividend. Oh dear ! Problem for RPC.

Agria buy-in, RPC no longer has controlling interest, no control over dividend policy.

2011. RPC bonds due. How to raise the money in the new RP? bond series ?

Given the reason for RPC's existence, sale of PGW shareholding seems to be least preferred option. So expect a new issue of RP? bonds ?

That seems to make sense, and has to be a viable scenario at least.

I am not going into RPC010 at this time.

I might spend more time looking at PGW and NZFSU over the next few months, but not making a move now.


Alan.

[Alan3285]

Look like they might have a few problems meeting payments as they fall due:

http://www.nzherald.co.nz/markets/ne...0638889&pnum=0

"Market commentator Arthur Lim says a key stake in rural supplier PGG Wrightson could be up for sale after Craig Norgate's investment company warned it does not have enough money in its account to meet the next dividend payment to its preference shareholders.

Rural Portfolio Capital, the financing arm of Norgate and the McConnon family's Rural Portfolio Investments, which owns 12.5 per cent of Wrightson, told the market late on Thursday it had breached a trust deed by failing to have enough money in its escrow account to make an October payment.

It has 30 days to remedy the breach. In its statement, Rural Portfolio Capital said it planned to meet the deadline and had also asked for an extension from its other funders to allow it to pay them back."


Will be an interesting one to watch!

Alan.

[Enumerate]

Rural Portfolio Investments, the investment company of Baird McConnon and Craig Norgate, has sold down its stake in PGG Wrightson, raising money to repay debt and top up its dividend escrow account.

A unit of RPI sold 6.4 percent, or 48.5 million shares, of Wrightson for 56 cents apiece, raising $27 million in an off-market transaction, the company said in a statement.

The shares had been held as security for borrowings and the sale proceeds will be used to repay the debt, leaving a surplus to cover ongoing costs and add to the escrow account.

RPI continues to hold 6.2 percent, or 46.8 million shares, in Wrightson.

Looks like RPI is selling down PGW and paying off it's senior debt. Seems as if funds have been freed to heal the interest escrow account covenant breach in RPC010.

Looks like they might make it to the end of the year. At this point the security shortfall in the repayment of capital looks like the most significant issue.

[winner69]

Too complicated to comprehend on friday afternoon but does that announcement today say RPI et all are in the crap - good and proper

Or did I misread it because shown as RPC010 a big gainer on some sites with green arrows and all that sort of stuff

[GTM 3442]

Too complicated to comprehend on friday afternoon but does that announcement today say RPI et all are in the crap - good and proper

Or did I misread it because shown as RPC010 a big gainer on some sites with green arrows and all that sort of stuff

In this case, it means that the yield went from 118% to 150% (albeit on $30k turnover).

[winner69]

In this case, it means that the yield went from 118% to 150% (albeit on $30k turnover).

But jsut to highlight who stupid most sites are about reporting these sort of things Direct Broking say the market cap of RPC010 is now $90m .... ie 60 mill times 1.50

Funny eh when you can a buck for 40 cents or something

So that announcement did unfortunately lay it all out for investors

[Enumerate]

It's all over - RPI has run out of funds.

They cannot "heal" the deficit in the dividend escrow account. Hence, they are in violation of the trust deed. There is no prospect of dividends from PGW, NZS or other funds from RPI.

They are now "worth" the mark to market value of the security. (We did this calculation before - with the addition of $0.75million in the div escrow account from the RPI asset sales.

The issue is will the Trustee sell the security (look out below .... PGW and NZS coming down) or will they distribute the security pro rated to the RPC010 holding and let the punters decide to hold or sell (look out below ... PGW and NZS coming down).

Sad situation ... but the RPI executive seems to be behaving with integrity. It is shocking that RPI has had it's equity wiped out ... the losses on the PGW and NZS holdings have been crippling.

But jsut to highlight who stupid most sites are about reporting these sort of things Direct Broking say the market cap of RPC010 is now $90m .... ie 60 mill times 1.50

I have seen this "capitalisation" reported by someone (who shall not be named) who should know better. I'd say that someone who bought RCP010 based on this misinformation could be profoundly pi$$ed off to find out, in fact, that the capitalisation has gone the opposite direction. You get better analysis (but poorer spelling) on www.sharetrader.co.nz.

[GTM 3442]

It's all over - RPI has run out of funds.

Sad situation ... but the RPI executive seems to be behaving with integrity.

Quite agree. How different to some of the behaviour we've seen recently in the Finance Company area.

Big man.

[trout]

struggle with the logic that moving from a salary of 3.5m to .5 constitutes a 3mil pa investment in a company

[Alan3285]

struggle with the logic that moving from a salary of 3.5m to .5 constitutes a 3mil pa investment in a company

Are you saying that you would prefer staying on the salary of $3.5m and then making cash investments of $3.0m?

Alan.