Apathy blamed as PGW votes to sell

The New Zealand Shareholders Association has taken a swipe at the apathy of financial institutions after a special meeting of PGG Wrightson voted to sell the jewel in its crown — its seeds business — to Denmark’s DLF for $434 million.

The rural services company, in issuing results from yesterday’s annual meeting and special meeting in Christchurch, said the motion to divest gained 96.92 per cent support, but the votes, for and against, came to just 64 per cent of PGW’s issued capital. The motion required 75 per cent approval to get through. The association opposed the sale. “It’s just so disappointing when shares are not voted, and it’s the institutions who have not voted,” CEO Michael Midgely said. “They really are doing their clients a disservice.”

On the eve of the meeting, PGW Wrightson’s controversial chairman Guanglin (Alan) Lai announced that he was stepping down, effective from immediately. Lai is executive chairman of Agria, which owns just over half of PGG Wrightson.

Midgely also said shareholders could have done with more notice of Lai’s move in advance of the meeting.

“With Lai no longer chairman you would have to wonder if the position of Agria might change,” he said.

The association said short-term gain for investors would be offset by the remaining business being half the size, and inferior to the seeds unit. The sale, while still subject to a number of conditions, is worth $292m to shareholders if it goes ahead.

Deputy chair Trevor Burt told shareholders the transaction delivered compelling value to the company and allowed for a continuing relationship with DLF. He said the company is still reviewing the remaining businesses and has brokers First NZ Capital on retainer to “explore options for PGW’s business, growth opportunities, capital and balance sheet requirements and potentially shareholding structure”.

PGG Wrightson’s cornerstone shareholder Agria Corp owns 50.2 per cent of the rural services firm.

That stake became problematic when the Overseas Investment Office said it was reviewing the company’s “good character” status due to an ongoing probe by the US Securities and Exchange Commission over the accuracy of disclosures and accusations of share price manipulation. Agria recognised a provision of US$3.8 million as at June 30 for what it estimates it will have to pay the SEC to settle the probe, including legal costs. In a filing to the SEC earlier this month, Agria said it was co-operating with the US regulator and nearing a potential settlement over claims.

Lai, in a statement to the NZX, said: “I will always have great fondness for New Zealand and for PGW. The work that Agria has been able to do to benefit PGW and New Zealand is not yet finished, but I think that my time in leading PGW as chair must come to an end as I need to focus on the next phase in my career and spend more time with my family,” he said.

Joo Hai Lee has been appointed as interim chair, with Trevor Burt continuing as deputy chair.