NZSA takes aim at institutions after shareholder vote for PGW seeds sale

Shareholders in rural services group PGG Wrightson have voted to sell its seeds assets. Photo/Hawke's Bay Today.

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 today's annual meeting and special meeting in Christchurch, said the motion to divest gained 96.92 per cent support, but the 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," he said. "They really are doing their clients a disservice," he said.

On the eve of the meeting, PGW Wrightson's controversial chairman Guanglin (Alan) Lai announced that he was stepping down, effective from today.

Lai is executive chairman of Agria, which owns just over half of PGG Wrightson.

Midgely also shareholders could have done with more notice of Lai's 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 with inferior to the highly regarded 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 still 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 percent 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.

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

Burt said a review of the board's composition and governance would be undertaken and the market would be updated on outcomes "in due course".

The association said the mostly cash offer from DLF Seeds was attractive at face value, with a $292m capital return attached.

Agria Corp took control of Wrightson in 2011, having taken a cornerstone shareholding in 2009 to recapitalise the rural services firm in the aborted merger with Silver Fern Farms.

An independent valuation of the DLF transaction by KordaMentha found the offer to be fair to minority shareholders.

As well as the risk the transaction could leave Wrightson "a shadow of its former self", Midgley said there may also be concern as to whether the sale would be in the broader strategic interest of New Zealand.

Similar arguments were mounted when Agria mounted its partial takeover in 2011, however no local investors were willing to match that price.

PGG Wrightson shares last traded at 57c, down one cent from Monday's close.

- with BusinessDesk