PGG Wrightson Finance says it will seek bondholder approval to extend the maturity date of up to NZ$100 million of bonds on issue by a year until October 8, 2011.
Read the company's statement below:
PGG Wrightson Finance (PWF) has today confirmed to Bondholders that it wishes to extend the PWF030 Bonds a further year, from 8th October 2010 to 8th October 2011, as contemplated in the original $100m offer.
The key requirement to affect the roll over was the extension of the Crown retail deposit guarantee scheme and PWF’s acceptance into that scheme.
The original conditions of the Secured Bonds permitted PGG Wrightson Finance to extend the term of the Secured Bonds by up to 12 months from their maturity date of 8 October 2010, if the Crown guarantee which PGG Wrightson Finance held was also extended on similar terms. PGG Wrightson Finance was earlier this year accepted into the extended Crown retail deposit guarantee scheme and granted an extended Crown guarantee.
As the extended Crown retail deposit guarantee scheme is on different terms, extending the bond requires the approval of Bondholders. The Bondholder meeting is scheduled for 28th July in Christchurch.
As part of this process PWF has today registered a Short Form Prospectus relating to a proposal to vary the terms of the PWF030 Bonds.
Those variations are to:
- permit the Company to exercise the term extension option by reason of it having the extended Crown guarantee;
- permit Bondholders who hold in excess of $250,000 of PWF030 Bonds and other securities of PGG Wrightson Finance at the date the term extension option is exercised to sell back Secured Bonds to the Company so as to reduce their exposure to within the coverage range of the extended Crown guarantee;
- permit PGG Wrightson Finance to hold repurchased Secured Bonds as treasury stock; and - as the proposal is not being made to overseas Bondholders, confirm they will be repaid on 8 October 2010.
“Maintaining a bond program is an important part of our diversified funding programme for the company, and we have committed to maintaining a bond offering in the market going forward. Extending the bond for a further year, particularly with the continued benefit of the extended Crown retail deposit guarantee scheme provides an above-market interest rate for those existing investor clients, which is an appropriate way to reward their ongoing support, ”says CEO Mark Darrow.
One of the objectives of the bond extension is to ensure that no bondholder is disadvantaged by the process. With the changes to the guarantee scheme that reduce the benefit of the guarantee from $1.0 million to $250,000 per eligible investor (per non bank deposit taker), there are a small number of bond holders affected. Accordingly, as part of the proposed bond extension, PWF will offer to purchase back any bond holdings over the reduced guarantee threshold.
“We are more than happy to carry these as treasury stock. We do expect though many investors will still be comfortable to hold a portion of their bonds as excluded from the guarantee given the positive coupon return. This is certainly something evident from the investors in our secured deposit program where we continue to receive exceptional support. It is important though that we leave that investment choice with the individual bondholders.” says Darrow.
Bondholders will be mailed a Notice of Meeting and a copy of the Short Form Prospectus on 13th July. The proposal is made only to Bondholders in New Zealand. It also does not affect any other securities offered by the Company.