Text of PGG Wrightson/Silver Fern Farms announcement issued this morning:
KEY POINTS:
Settlement of PGG Wrightson / Silver Fern Farms unable to be completed at this stage.
PGG Wrightson has today advised Silver Fern Farms that it is unable to currently complete the recently approved transaction between the two companies.
The delay will allow time for funding arrangements to be revisited after changes necessitated by the recent turmoil in global financial markets.
The chairman of PGG Wrightson, Craig Norgate, said a number of banks which had committed to participate in funding the transaction had since been unable to finalise their credit approvals in time for today's part-settlement. "This is entirely a function of the extreme financial market conditions and their impact on banks' lending capacity in the current environment.
The transaction, in which PGG Wrightson is to become a 50 per cent shareholder in Silver Fern Farms, was to be settled in two payments - the first, of $145 million, which was scheduled for today; and the second, of $75 million, due by March 2009. As part of the funding arrangements PGG Wrightson had finalised a $78 million placement of shares to institutional and other investors and a fully underwritten retail share offer of $32 million in extremely difficult market conditions.
With the bank funding approvals unable to be completed by today, the share placement and retail issue have had to be deferred, meaning the completion of the proposal in its current form at the current time is not possible.
Mr Norgate 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."
Mr Norgate said that today's announcement was extremely disappointing for all those who worked so diligently on bringing it to fruition as well as to those Silver Fern Farms shareholders who supported it so well.
Mr Norgate also noted that the delay in completing the transaction is not in any way a reflection on the trading performance of either company, and would have no impact on their underlying position or funding arrangements. "Both companies have recently reported significant increases in earnings. Conditions in New Zealand's rural sector remain strong and resilient, in line with international demand for New Zealand's high-quality agricultural produce and recent declines in the New Zealand dollar. Both companies continue to perform well."
