PGGW gets bank support after big loss

An upbeat Craig Norgate has allayed market fears over the debt refinancing of PGG Wrightson, signing a deal with his bankers to bring the business back from the brinkreports the NZ Herald. The rural services provider yesterday confirmed it had reached an agreement with its three banks - ANZ, BNZ and Westpac - to refinance a $475 million loan facility. The debt had not been due for renewal for several months, but PGG decided to renegotiate it early in the face of tough economic conditions which last year sank its deal to buy a $220 million stake in Silver Fern Farms at the last minute. Norgate said the banking arrangement had been signed just that morning, in time for the half-year results, although the company had been working with the banks for the past couple of months to work out the deal. It had been an extremely busy six months for the business, which had achieved a strong trading performance, boosted by its seeds business and animal nutrition arm. Operating profits after tax were up 32 per cent to $22.1 million and revenue was also up 32 per cent to $738 million for the six months. But the net profits were hit hard by one-off costs. The mainly non-cash write-offs totalled $47.2 million, with $35.2 million relating to its investment in NZ Farming Systems Uruguay and $9.3 million to hedge fund contracts. A further $17 million was linked to the failed Silver Fern Farms venture for which it has put aside $10 million as a provision to go to Silver Fern. But questions remain over whether this will be enough to cover the compensation to Silver Fern Farms, with discussions now headed into mediation. Miles said PGG had not put together the $10 million figure lightly and it was not the only offer it was making to Silver Fern Farms. A proposed supply chain and procurement deal would put the total compensation at much more than $10 million.