16 Oct 2009

Chinese company takes stake in PGG Wrightson

8:51 pm on 16 October 2009

Rural services company PGG Wrightson has become the latest New Zealand firm to turn to China for funding.

China-based Agria Corporation will pay $36 million to take a 13% in the company, with a view to increasing that in the future.

The deal will give Agria at least two seats on the board, however Agria chief executive Xie Tao says he does not want a controlling stake.

PGG Wrightson will use the money to pay some of the $200 million owed to its banks by the end of March next year.

The company is also considering raising money through a rights issue and by selling non-core assets. Details will be announced in November.

PGG Wrightson chief executive Tim Miles says Agria is interested in setting up a livestock trading system and a rural services business in China. The companies will also cooperate on seed cultivars, he says.

Chinese electronic and appliance maker Haier took a 20% stake in Fisher & Paykel Appliances earlier this year as the company raised more than $200 million from investors to reduce debt.

Shares PGG Wrightson jumped by 20% after the announcement, closing up 13 cents to 78c on Friday.