Shareholders would be entitled to subscribe for nine new shares for every eight held, at an issue price of 45c per share, PGG Wrightson said today.
The rights issue was fully underwritten by UBS New Zealand Limited and First NZ Capital Securities.
Altogether, PGG Wrightson is aiming to raise $249.4m through three capital raising initiatives.
Those initiatives include the issuing of 41.1m new shares to Beijing-based Agria Corporation for 88c each, raising $36.2m, which was announced last month.
PGG Wrightson said that placement would be completed by Monday, meaning Agria would be eligible to participate in the rights issue.
PGG Wrightson also intended to raise about another $32.5m through a placement of the New Zealand dollar equivalent of $US25m in convertible redeemable notes in PGG Wrightson to Agria.
Proceeds from the notes would be used to invest further capital into PGG Wrightson Finance.
PGG Wrightson said the proceeds of the capital raising and the cash generating initiatives would be used predominantly to repay debt, principally a $200m amortising debt facility due by March 31.
The total reduction in net debt outstanding during the year to June 30, 2010 was expected to be about $277m, PGG Wrightson said.
That would comfortably exceed a debt repayment schedule agreed with PGG Wrightson's banking syndicate earlier this year.
The share issue and related agreements would result in a realignment of shareholdings between the existing cornerstone shareholders, Rural Portfolio Investments (RPI), Pyne Gould Corporation and Agria.
RPI, which currently has a shareholding of 27.5%, had indicated it would not subscribe for the shares it was entitled to, and would sell about 58% of its rights to Agria at a negotiated price, PGG Wrightson said.
RPI did intend to subscribe for a small proportion of its rights entitlements and to sell most of its remaining rights through a bookbuild process. When the rights issue was finished RPI would have a shareholding of at least 11.8%.
Pyne Gould, which now has a 20.7% stake, had committed to take up all of its entitlement, resulting in a shareholding of around 18.3%.
Agria was expected to reach a shareholding of 19% in PGG Wrightson.
PGG Wrightson managing director Tim Miles said difficult trading conditions experienced from the final quarter of the 2009 year had persisted into the current trading period.
But the company was making progress through improvements to its operating performance and efficiency.
Figures in the simplified disclosure prospectus registered today put operating earnings before income, taxation, depreciation and amortisation at $73.4m for the year to the end of June 2010, compared with $80.9m for the 2009 year.
The prospective financial information did not take into account any revenue that may arise from the cooperation agreement with Agria.
A trading halt on PGG Wrightson shares, which last traded yesterday at 65c, is to remain in place until the outcome of the bookbuild and placement is announced.
