Board upheaval at PGW
The board of rural trader PGG Wrightson Limited has agreed to call a special meeting demanded by its largest shareholder.
Chief executive, Mark Dewdney Dewdney says the market and PGW's trading performance has held up well in the past six months despite some localised challenges.
The upper North Island saw another summer drought develop with farmers looking for rains to come mid-April. Just as this happened a tough spell in the South was experienced with very wet and cold weather conditions challenging arable production and winter sowing activities.
"In recent weeks the dairy forward herd sale contract settlements were transacted to close out the season for livestock," Dewdney says. "This saw the Livestock business report a record month for May. Driving this was the large quantum of dairy forward sales transacted in May along with the increasing values in sheep and beef, and higher than forecasted auction cattle volumes yarded. With this busy period behind us we are now better placed to provide a guidance update for the current fiscal year."
The company has also acquired a property company AG Property Holdings Ltd (AG Property) that owns a number of properties that are leased by PGW. AG Property collectively owns 40 properties that are a combination of retail stores, seed processing sites and livestock saleyards located across New Zealand. AG Property has no other assets, staff or operations and by acquiring the company, PGW obtains ownership of the 40 properties about $30 million.
Shortly after the 2005 merger of Wrightson and Pyne Gould Guiness the company sold these properties subject to a lease back to PGW. Dewdney says: "The decision to sell the properties was made at a different point in time, and the company now has a completely different look to its balance sheet and we are pleased to have been able to negotiate their acquisition."
"The business continues to evolve and this gives us the opportunity to re-shape our property portfolio. A strategic review of the company's property needs would be undertaken and some of the reacquired sites may ultimately be divested. The important thing is that this acquisition provides PGW with flexibility to review its property and lease needs and make decisions that are right for the business today and moving into the future."
The transaction will see debt increase by a corresponding amount.
PGW expects to announce its full year results on August 13 with details of the announcement to be confirmed closer to the time.
