What's $60 million between friends?

Craig Norgate. Photo / Simon Baker

Baird McConnon is standing by business partner Craig Norgate despite the failure of Rural Portfolio Investments costing his family more than $60 million.

Rural Portfolio Investments was set up in 2003 as a joint venture between Norgate and Otago's McConnon family with the aim of investing in Wrightson - later merged with Pyne Gould Guinness to form PGG Wrightson - and as a vehicle for other agribusiness investments.

Trustees Executors this week appointed receivers to the secured assets of Rural Portfolio Investments and its financing arm Rural Portfolio Capital.

Norgate yesterday confirmed that an initial investment of $40 million in the group, followed by $19 million in April last year and a further $1.2 million - a total of $60.2 million - had come from the McConnon family.

A statement last week said that other than $8.5 million of dividends received between 2004 and 2008 the shareholders of Rural Portfolio Investments would not recover any of their investment.

Baird McConnon said the loss could be absorbed.

"There's no doubt it's very disappointing," McConnon said. "It's certainly not pleasant but it's absorbable, I mean life will go on."

In 2008 the McConnon family was valued at $140 million by the NBR Rich List. Last year that figure was slashed to $80 million as the fortunes of PGG Wrightson and RPI faltered.

But the relationship with Norgate remained close and he would work with him again.

"Absolutely," he said. "The reality is that what got us was the way the world turned out to be a very ugly place [during the global recession]."

Norgate said his relationship with the McConnon family went back a long way.

"It transcends money issues but it's not very pleasant," he said.

"I don't want to make light of what's happened, our focus at the moment has been on the [redeemable preference share] holders but the story behind it is actually they've [McConnon family] lost more money than anybody."

Norgate was paid about $500,000 a year by Rural Portfolio Investments as a management fee. He says that figure covered costs for renting office space and hiring a personal assistant as well as payment for his time.

"I gave seven years of my life out of a significant career so it's not only the seven years that's gone, it's the career path as well."

The financing arm Rural Portfolio Capital issued $60 million worth of redeemable preference shares to the wider investment community which had been due next year.

Secured assets comprise 46.8 million shares in PGG Wrightson, 10 million shares in NZ Farming Systems Uruguay and $742,314 in a dividend escrow account - in total worth about $29.4 million based on yesterday's share prices.