SFF in tight spot over PGGW shares

Silver Fern Farms faces an unenviable decision about what to do with its 10 million shares in rural servicing company PGG Wrightson, which have halved in value since being issued in April reports The ODT. The shares were part of a $49.6 million settlement package from PGG Wrightson (PGGW) for failing to complete last year's partnership with the meat co-operative, but since then the value of PGGW's shares have fallen from $1.20 to 62c. Craigs Investment Partners broker Chris Timms said lurking in the background was the possibility PGGW could have a rights issue to attract some desperately needed fresh capital. While the company has not announced plans to do so, Mr Timms said it had few alternatives to improve its debt equity ratio. Silver Fern Farms (SFF) said last month it intended selling all or part of its stake in PGGW, but Mr Timms said if PGGW had a rights issue before then, SFF could have to participate to preserve its investment. Another alternative for SFF was to sell its shares sooner, but to do so could be at a discounted price because a new buyer faced the same issue of also having to participate in a rights issue. "It [SFF] is stuck between a rock and a hard place. "If it wants to sell now or find someone to sell them to, they would have to sell at a discounted price."