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 31 cents a share to investors through a pro-rated share buyback, which needs shareholder approval and sign-off 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 56 cents, and were trading at 64 cents 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," chair Rodger Finlay said in a statement.
"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."
Chief executive Ian Glasson will leave the slimmed down business at the end of May, and be replaced by Wrightson's general manager of retail and water, Stephen Guerin. Glasson will help with a short transition and handover through to the end of his contract, the company said.
Wrightson's board is still reviewing the company's structure and expects to announce any changes before the end of the financial year on June 30.
The business is entering a new phase after a recent boardroom reshuffle. Finlay, David Cushing and Sarah Brown joined the board on April 30, replacing Trevor Burt, Bruce Irvine and John Nichol.
Finlay said the outlook for the rest of the year was mixed, and warned that operating earnings will likely be at the lower end of the $25-30 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.