Agria to partner with New Zealand's PGG Wrightson

New Zealand rural services concern PGG Wrightson announced a strategic partnership with Chinese agricultural products firm Agria, the Wall Street Journal reported. The New Zealand firm is hoping that Agria, as its new cornerstone investor, can pull it out of debt and increase earnings. Agria will invest in PGG Wrightson through the placement of new equity representing 13% of PGG’s share capital. The investment will be made at US$0.66 a share, at a value of US$27 million, representing a 35% premium over the stock’s price of US$0.49 before the deal. The US$27 million will be used to pay off the firm’s debt. While Agria intends to become a "significant shareholder" over time, PGG Wrightson Chairman Keith Smith said, "This is not a takeover. This is a mutual partner that is going to add value to PGG Wrightson." The deal is contingent on several conditions: PGG Wrightson must enter an underwriting agreement in relation to any proposed equity raising, and Agria must be satisfied that sufficient funds will be raised from any proposed equity raising to enable PGG Wrightson to repay a US$150 million debt facility by March 2010.