The global credit crisis appears to have scuppered rural services firm PGG Wrightson’s NZ$220m (US$145.79m) buy of a 50% stake in New Zealand’s biggest meat processor Silver Fern Farms.
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PGG Wrightson chairman Craig Norgate said uncertainty in the global investment markets meant the part-settlement due to go through yesterday (1 October) failed because some of the banks providing funding for the deal had been unable to finalise their credit approvals.
Wrightson planned to raise NZ$78m by placing shares with institutions and other investors at NZ$1.80 apiece, and announced a NZ$32m offer to existing shareholders.
However, the company today said the NZ$78m placement “will not be completed, given the delayed settlement and has therefore been cancelled”.
The news is a blow to Silver Fern, who had been relying on the capital injection to re-capitalise shareholder funds of NZ$510m. The meat group planned to spend some of the capital on reducing debt after its takeover of Richmond Ltd and some on modernising meatworks and robotic technology.
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By GlobalDataThe group anticipated that the deal would bring savings in funding costs of about NZ$16m a year.
