Shares in rural servicing company PGG Wrightson (PGG-W) marginally regained some lost ground yesterday after it announced the successful raising of $78 million in new capital to part fund its new partnership with meat company Silver Fern Farms.
A two-day share trading halt was lifted yesterday, but the stock value dropped on the New Zealand Stock Exchange, opening at $1.81 after closing on Wednesday morning at $2.10.
At the close of trade yesterday it traded at $1.83 after hitting a high for the day $1.92.
On September 1 the stock was trading at $2.73.
PGG-W confirmed yesterday $78.1 million had been raised through the placement of 43.3 million shares at $1.80 through a global book-build process.
The equity placement would be supplemented by a $5000 $1.80 a share New Zealand entitlement targeted at retail shareholders.
ABNAmro Craigs broker Peter McIntyre believed private inves-tors would snap up the offer and if they did not, institutional investors would.
PGG-W was seeking $220 million to fund its 50% stake in Silver Fern Farms (SFF), $100 million through new equity and $120 million in debt.
Mr McIntyre said the issue price of new stock had been discounted to quickly attract investors, which had been a successful tactic.
But, investor nervousness at the SFF deal was evident by the speed with which the price of the stock had fallen since hitting $2.73 on September 1.
He said interest would now focus on the cost of borrowing $120 million.
Settlement of the placement of shares would occur next Tuesday, September 30, with the PGG-W-SFF partnership, which brings together the country's largest rural servicing company and the largest meat processor and exporters, begins on October 1.
