Investors continued to punish PGG Wrightson and its associated stocks yesterday, concerned at weak trade data and the ability of New Zealand Farming Systems Uruguay to raise sufficient debt.
Shares in PGG Wrightson (PGG-W), which were caned 15% on Thursday, yesterday plummeted a further 11% to $1.15.
New Zealand Farming Systems Uruguay (NZFSU), in which PGG-W is a cornerstone shareholder, managed to retrace some of the previous day's 20% loss, being up 3.3% at 62c.
PGG-W shareholders appeared to take little comfort from a statement yesterday that PGG-W Finance had closed its $100 million bond offer over-subscribed, its debenture book had grown more than $80 million and additional bank wholesale lines were in place.
The company said yesterday that inquiries for rural loans were increasing while the company was deliberately targeting higher levels of liquidity, given the global credit crunch.
The company tried to install some confidence, saying sheep farmers were expecting a 13% increase in income, average lamb prices were $20 a head higher than a year ago, deer farmer incomes were 24% higher and the dairy payout was still one of the highest.
Equally, NZFSU shareholders appeared concerned at news the company was still negotiating funding to meet ongoing development requirements.
The company has secured $US16 million in long term funding from Uruguayan banks but was still negotiating other lending lines.
ABN Amro Craigs yesterday issued a hold notice on NZFSU shares, but Dunedin broker Peter McIntyre said securing that additional funding would remove a risk factor.
But given the company needed an estimated additional $US84 million, there was a chance, he said, NZFSU could seek funding from shareholders or through a rights issue.
It was a concern NZFSU had yet to secure the debt facilities to allow it to finish its development programme.
PGG W was bearing the brunt of some negative rural sector news, said Mr McIntyre.
Norgate discounts suggest- ions of RPI new equity, PGG sell down - Page 26
