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Crafar lender PGG Wrightson gets NZ$25 mln payment as receiver's sale to Chinese firm finally settles

Posted in Rural News Updated

Rural products and services provider PGG Wrightson says it has finally received repayment of its outstanding loans to the Crafar farms, getting about NZ$25 million.

The payment comes after Crafar receiver KordaMentha announced late on Friday the sale of the 16 central North Island dairy farms to China's Shanghai Pengxin, for about NZ$200 million, had settled.

New Zealand's largest family owned dairy business, the Crafar farms were put into receivership in October 2009 by lenders Westpac, Rabobank and PGG Wrightson Finance. The receivership came after interest.co.nz revealed animal welfare issues at the farms.

Receiver's reports for the four Crafar companies - Plateau Farms Ltd, Ferry View Farms Ltd, Taharua Ltd and Hillside Ltd - show Westpac was the security agent and total bank debt was NZ$194 million at the time of KordaMentha's October 5, 2009 appointment. By April this year bank debt was up NZ$80 million, presumably due to interest, to NZ$274 million.

As of April this year KordaMentha's receiver's fees had reached almost NZ$7.3 million.

PGG Wrightson sold its specialist rural lender PGG Wrightson Finance to Heartland New Zealand last year but kept some "bad loans" including the Crafar one.

"The amount (NZ$25 million) is slightly above expectations previously indicated and represents settlement of the Crafar Farms debt, subject to small residual receipts as farm cash flows are finalised," PGG Wrightson said this morning.

"The Crafar Farms loans represent the bulk of the NZ$29 million of outstanding loans retained by PGG Wrightson under its subsidiary PGW Rural Capital, following the sale of PGG Wrightson Finance last year."

Both Westpac and Rabobank declined to comment.

Late on Friday KordaMentha's Brendon Gibson said despite a long and challenging process, the receivers were happy to have secured the sale of the Crafar farms at a "very pleasing" price.

"Following extensive local and international marketing of the farms as individual units and as a group, Pengxin's offer was far and above the best received so we are very satisfied to secure final settlement," Gibson said.

"We have operated the properties for three years and the farms will be handed over as a full going concern for Pengxin and Landcorp," he added.  "This was one of the most difficult, challenging and complex transactions we have completed."

Gibson said the receivership would conclude with the final Fonterra payout for this season not due until October 2013.

In an interview with interest.co.nz in August 2010, then PGG Wrightson Finance CEO Mark Darrow said although he couldn’t provide specific numbers, PGG Wrightson Finance was very much the junior partner among the three Crafar lenders with its balance sheet exposure about 4% of the loan.

(Updates add detail, Westpac & Rabobank's non-comments).

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10 Comments

Supp. questions: 1. What is

Supp. questions:
1. What is the dollar amount in fees paid to KM.
2. What is the dollar amount paid and headline penalty interest /fees paid to the banks.
 
and:
"Following extensive local and international marketing of the farms as individual units and as a group, Pengxin's offer was far and above the best received so we are very satisfied to secure final settlement," Gibson said.
Best for whom?
 

I've updated with some detail

I've updated with some detail that helps with your questions 1 & 2.

Thank you.

Thank you.

Long forgotten in all this

Long forgotten in all this are the unsecured creditors that will not get paid. The transport companies, vets, electricians, plumbers etc etc The Taupo region is particularly hard hit in this failure.  

A quick look at receivers

A quick look at receivers reports shows that Receivers paid around $5 million in Fees
Legal fees around the $3.5 million
Security $700,000
Consultancy fees in the hundreds of thousands
Grazing and supplement  close to $4million
No debt reduction to banks at all
Taharua Farms income in $11,171,000
expenses $10,739 294
Nett $431,906 ( Last receivers report June 2012)
Plateau farms
Income $36,353,581
expenses $33,342,869
Nett $3,610,720
Ferry View farms
income $12,129,000
Expenses $11,561,595
Nett $567,542
The point of it all ???? kept a select few employed for 3 years
 

This sale completing will

This sale completing will have quite an impact on the REINZ farm sales figures...

The point wasnt  stopping

The point wasnt  stopping them before they rorted more local contractors and businessmen, before they committed more acts of environmental sabotage, and before they committed more acts of animal cruelty. However, the result of the liquidation was this, and for that I think we can be greatful.
If you think the recievers should have been able to manage those farms better, and made more money, I think you are wrong. They are accountants, they are trying to fix the mire Crafars and the banks created. They arent farmers. They are paper pushers just doing there best to sort other peoples mess. 

I suppose Gareth the banks

I suppose Gareth the banks and many farmers will be relieved to have these high valuation figures added to the mix..........keep that balloon fizzing slow

Heartland have taken over the

Heartland have taken over the WrightsonPPG loan book. How many unsecured loans do they have? Wrightson started up in rural Finance at the worst possible time and the assets backing those loans are worth less now, in some cases a lot less. Next SCF?

Yes Andrew, its interesting

Yes Andrew, its interesting to see PGG have their money out of the Crafar deal now. So the Heartland loan book could be very shonky, despite supposedly getting the better loans. How did they decide which were the better loans I am left wondering.