PGG plans to return $235m to shareholders

WELLINGTON: PGG Wrightson plans to return $235 million to shareholders via a share buyback, less than previously flagged, now the sale of its seeds division to Denmark’s DLF Seeds has left it flush with cash.

The board intends to return 31c a share to investors through a pro rata share buyback, which needs shareholder approval and signoff by the courts. The company intends to send out detailed information in a notice of special meeting in the coming weeks. The shares last traded at 54c, and were trading at 64c before the deal was first announced in August last year.

The rural services company always intended to return a portion of the proceeds to its shareholders after booking a $120 million gain on the sale of the division. DLF paid $413 million for the Wrightson unit and took on $21 million of net debt. It initially flagged a return of up to $292 million.

‘‘On settlement of the seed and grain business, PGW repaid its

bank facilities while the board assessed the appropriate quantum of the capital return,’’ chairman Rodger Finlay said.

‘‘Prior to making a formal recommendation to shareholders, new bank facilities will be arranged and shareholders will be provided with detailed

explanatory information to assess the merits of the proposal.’’

Mr Finlay said the outlook for the rest of the year was mixed, and that operating earnings will likely be at the lower end of the $25 million$30 million guidance.

‘‘Farmer hesitancy in the cattle

livestock market due to the unusual season and Mycoplasma bovis will continue to be a risk factor for the business, particularly during the remainder of May and June, which are important contributors to the earnings of our livestock business,’’ he said. — BusinessDesk