Eion Garden (L), Silver Fern Farms chairman, and Craig Norgate, PGG Wrightson chairman. Photo / Simon Baker
The global financial meltdown has put a spanner in the works of the planned PGG Wrightson/Silver Fern farms deal, with the deal now on ice after PGG failed to secure bank finance.
Yesterday PGG Wrightson was supposed to hand over $145 million as part of its $220 million
purchase of half of Silver Fern Farms, formerly PPCS.
PGG Wrightson chairman Craig Norgate said in a press statement that a number of banks which had committed to take part in funding the transaction had been unable to finalise credit approvals in time.
"This is entirely a function of the extreme financial market conditions and their impact on banks' lending capacity in the current environment," he said.
"It is unfortunate that market conditions preclude settlement today, and we will revisit the matter with all parties and endeavour to resolve it as quickly as possible.
"The delay is likely to be counted in weeks rather than days, but last night's events in the United States - the failure of the administration's bailout proposal to be approved by the House of Representatives and the resulting nosedive on Wall Street - could not have come at a worse time."
Norgate said both companies continued to perform well and the merger delay was no reflection on their trading peformance.
Earlier this week a major capital raising by PGG Wrightson missed its target.
PGG Wrightson had aimed to raise about $100 million towards the $220 million cost of buying half of meat processor co-operative Silver Fern Farms.
"[We] did expect to get it away successfully at somewhere around $2.50," Norgate said.
"The following day after the road show Lehman Brothers fell over."
PGG Wrightson was committed to raising the equity ahead of the first $145 million settlement with Silver Fern Farms.
In the end 43.4 million new shares were placed at $1.80 each, raising $78.1 million.
HERALD ONLINE
