PGG Wrightson Finance says its banks, BNZ and ASB's parent Commonwealth Bank of Australia, have agreed to extend its bank loan facilities which were due to expire on October 28 next year, by three years.
The rural lender's CEO, Mark Darrow, said today the extended bank facility would take the form of a NZ$100 million, three-year revolving credit facility. That's down from a NZ$120 million limit the company had at June 30, which had been drawn down by NZ$21 million. As of June 30, 2009 the bank facility limit stood at NZ$180 million.
Darrow said the extension was a major step towards pushing out the duration of PGG Wrightson Finance's funding. The company is one of just seven to have been accepted into the extended Crown retail deposit guarantee scheme, which launched last week and runs until December 31, 2011.
"It is important that we lengthen our maturity profile out past the end of the guarantee scheme in December 2011," said Darrow.
“A bank agreement that exceeds that by some two years provides a solid backbone to our diversified funding plan moving forward. The confidence shown by the banks to extend the facilities should also be viewed very positively, particularly by our retail investors, as we substantially lengthen our funding and provide a degree of insulation and surety as the industry exits the guarantee scheme,” he added.
Being part of the extended scheme was about giving investors’ choice, said Darrow, and providing a longer period of time for them to understand the rigors of the Reserve Bank's new non-bank deposit taker regulatory environment over a two year period.
“Investors are already displaying growing confidence in the company as more and more take up the excluded (unguaranteed) option, supported by a higher interest rate. Already, 30% of retail deposits are either not subject to the Crown guarantee, or are invested out past the Crown guarantee expiry date,” said Darrow.
The bank facility was part of a NZ$412.2 million wall of funding maturities PGG Wrightson Finance faced in the 12 months to March 2011. In August the company also secured the backing of investors' holding NZ$100 million worth of NZX listed bonds to roll over their maturity by 12 months till October 8 next year.
As of June 30, PGG Wrightson Finance had NZ$247.6 million worth of debentures on issue and NZ$70.8 million of what it termed deposits and other borrowings.