Craig Norgate is clearly not one prone to sulking. When he was humiliatingly replaced as Fonterra chief executive in June 2003, Norgate could have been forgiven for licking his wounds and quietly retreating from public life reports The Dom Post. But less than six months later there he was with a sharemarket raid on rural services company Wrightson, which turned into a full-blown endeavour to lead rationalisation in the rural sector. The unspoken fact to emerge from the disaster that was yesterday's PGG Wrightson annual result was that Norgate's dream is in tatters. He has already stood down as the company's chairman. Next will come the surely unpalatable fact that he is about to lose his always tenuous position as the company's main shareholder. Norgate has maintained a nearly 30 % in PGG Wrightson with the assistance of the wealthy South Island McConnon family and through a company that borrows money directly from the public to fund the stake. PGW has to repay its bankers $200 million by March. Unless it sells some chunky assets - and doing so would undermine the whole rationale of the business - it is to be imagined the company will need a capital raising of somewhere in the order of $150 million. Based on current share prices it would be difficult to see any share offer being pitched at anything more than about 50 cents a share. This would mean issuing about 300 million new shares. The company has just 315.8 million at the moment. If you assumed a capital raising on such terms, and supposing that Rural Portfolio Investments does not take part, its 88.5 million shares would end up representing only about 14 percent of the diluted capital base. What you have got then is a big investment of questionable strategic value. If the parties that collectively control about 50 percent of PGW's capital are not able to participate in a capital raising then PGW will simply have to find a new major shareholder from somewhere. Clearly the door would be open now for a party to make an opportunistic takeover bid for PGW.
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