9 May 2019

PGG Wrightson shareholders to receive $235m through share buyback

11:21 am on 9 May 2019

PGG Wrightson is to return $235 million to its shareholders through a share buyback.

PGG Wrightson

Photo: Facebook / PGG Wrightson

The money is the proceeds of the sale of its seeds business to Danish firm DLF Seeds for $434m, which the company said would deliver a capital gain of $120m and boost its end of year result.

It's used the proceeds of the sale to reshape its balance sheet with a restructuring of debt and money for further development of certain projects.

"A pro-rata share buy back gives a sure outcome and ensures it's fair to all shareholders rather than placing an offering and gauging interest," said chief executive Ian Glasson.

The proposal is for the company to buy back a certain proportion of each investor's holdings at a set price. The company said it would probably equate to about 31 cents a share, but needs court and shareholder approval, although it would be tax free.

Meanwhile, Mr Glasson said farmer uncertainty was showing through and this was likely to affect earnings for its its rural services business.

"The signals are somewhat mixed and we remain cautious about the remainder of the year... farmer hesitancy in the cattle livestock market due to the unusual season and Mycoplasma bovis will continue to be a risk factor for the business, particularly during the remainder of May and June."

The company is now expecting operating earnings for its rural services business at the lower end of its previously stated $25m-$28m range.

However, Mr Glasson said he expected the interest rate cut made by the Reserve Bank to its cash rate should eventually flow through to farmers as retail banks cut their lending rates.