SFF sale of shares might be need for cash

A need for cash could be behind Silver Fern Farms' decision to sell all or some of its 10 million PGG Wrightson shares received as part of a settlement for last year's failed partnership.

Forsyth Barr broker Peter Young said when Silver Fern Farms (SFF) received the shares in April, it stated it intended being a long-term shareholder in PGG Wrightson, but the latest announcement suggested it needed cash, in the face of tighter credit markets and banks less willing to provide seasonal finance.

SFF was in the last week of raising capital through a share issue with shareholders and Mr Young said the share sale might indicate a low take-up of the offer and a need to sell non-core assets to cover any shortfall.

The meat co-operative announced yesterday it was consulting PGG Wrightson as per its settlement agreement, an intention to sell some or all of its shares in the rural servicing company.

SFF was PGG Wrightson's fifth-largest shareholder and at the time of the settlement the shares were trading between $1.10 and $1.35.

Yesterday, the stock had recovered ground lost on Wednesday, selling in late trading up 2c at 72c, having lost 2c the previous day.

Consultation on selling the shares would last 10 days before any sale, after which, if PGG Wrightson did not enable a sale which was acceptable to SFF, the shares could be offered for sale to other parties, brokers or the New Zealand Stock Exchange.

The compensation package for failing to settle the partnership also included a $30 million cash payment to SFF.