After a heated exchange on Tuesday both companies were avoiding the media yesterday, but observers fear the dispute with Dunedin meat company Silver Fern Farms (SFF), over compensation for last year failing to settle a $220 million unconditional partnership, was headed for the courts.
Investors certainly thought so, with shares in PGG Wrightson (PGGW) yesterday slumping 18%, or 22c, to close at a new low of 98c on an above-average trading day of 200,000 shares.
Its shares had peaked in the past year at $2.95.
Tuesday's $10 million compensation offer by PGGW to cover costs and an ex-gratia payment for failing to settle the partnership appears to be just one part of the rural servicing company's settlement plans.
PGGW senior managers were not talking yesterday, but they appear to be hinting at still wanting some involvement in SFF and the meat industry.
During the partnership debate last year, SFF Chairman Eoin Garden and PGGW chairman Craig Norgate spoke at length about a marriage of the skills of both companies - PGGW helping with producing and procuring prime stock and SFF processing and marketing it.
Mr Norgate's disclosure statement to the New Zealand Stock Exchange on Tuesday said the $10 million compensation was "in addition to the substantial benefits to be provided by an ongoing procurement agreement".
He said that PGGW failed to settle one element of the partnership deal because of the global crisis.
"PGGW has since sought to maintain continued dialogue with SFF, with the intention of identifying a mutually satisfactory basis on which the objectives of the arrangement could still be achieved," he said, hinting PGGW wanted to put right what it could not deliver on last October 1.
Having a continued involvement in SFF could potentially reduce PGGW's cash compensation, but SFF chief executive Keith Cooper said on Tuesday there was no guarantee SFF shareholders would support another arrangement between the two companies.
PGGW would be viewed by farmers as "clipping the ticket" and to succeed, PGGW would need to have a stake in SFF, he said.
He said the failed partnership had damaged PGGW's reputation, its share price had plummeted and he also noted that cornerstone shareholder, Pyne Gould Corporation, had indicated it wanted to sell its shares.
PGGW has a back-up plan, in the form of mediation before someone with the status of a High Court judge, but SFF has not yet committed to that.
SFF also had not yet revealed the size of damages it sought from PGGW, but a Grant Samuels report last year on the partnership provides a guideline.
It estimated quantifiable short-term benefits of $59 million, with long-term benefits of $111 million.
