Sunday, February 22, 2009

Will Cooper's witchhunt be in the best interests of NZ agriculture?

The Press said it all yesterday with a bold headline proclaiming PGG Wrightson's capital value had halved in just one week as the company's market capitalisation was slashed to $175 million on Friday.
Hindin Greene partner Grant Williamson, of Hamilton, said that investors had lost confidence in the company particularly after the Silver Fern Farms debacle.
Now, as reported on this blog earlier this week, Keith Cooper - CEO of SFF, is determined to go after Norgate for a figure widely rumoured to be around the $140 million mark.
There is no two ways about this, PGG Wrightson is in trouble. It has high debt levels and a big investor (Pyne Gould Corporation with a 21.5% percent share) wanting out. As Williamson suggests in the article, getting new debt is near impossible in the current economic environment.
So, is Keith Cooper's stance in the interests of New Zealand agriculture at this time, and indeed his own shareholders? Many of those shareholders will be PGG clients and none of them will want to see the company go belly up.
PGG Wrightson is an important company and Cooper's desperation to save Silver Fern's and his own bacon could see it pushed to the brink.
Norgate was stupid to go unconditional on the deal with Silver Ferns without funding but is it even stupider to sink his ship when so many farmers could be hurt by those actions? Couldn't a softly softly approach and a little more patience serve both companies interests?
It's a tricky question, and one I suspect Cooper and his men won't give any consideration to.
It would be interesting to hear your views on this...

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