Saturday, October 17, 2009

PGG Wrightson- Corporate Thieves?

In his Herald analysis of NZFS Uruguay today, Brian Gaynor did everything but suggest the directors of PGG Wrightson and NZ Farming Systems Uruguay should be prosecuted by the Serious Fraud Office and charged under the Companies Act with issuing a false prospectus.

The story is a classic case of duplicity, stupidity, deceit, broken promises and downright robbery. Read the whole thing. It is an excellent piece of investigative journalism.

PGG Wrightson's brand in the farming sector has been seriously damaged and shareholders should throw out all the directors involved in this debacle at the earliest opportunity.

Among the long list of mistakes listed, the most telling quote is this:-

"The company had property, plant and equipment worth $165.4 million as at June 2008, compared with the prospectus forecast of $48.3 million, yet it had revenue of just $7.8 million, compared with the forecast of $12.3 million.......


The other big issue is the huge performance fee of US$13.6 million for the June 2008 year, which was based on the company's share price performance for that period.

The performance fee formula was outlined in the original prospectus but why did the company change from a slow and steady farm acquisition strategy to an accelerated purchase approach when the performance fee would have to be paid out of earnings?"

Do you see what happened? There was only $7.8 mil from which to pay management fees of $13.6 mil.

Investors were promised a particular level of dividends based on carefully managed growth. Instead, they endured runaway unmanaged growth with huge asset based performance fees being paid to Wrightson PGG. There was no money left to pay the investors.

This was a carefully contrived scam, designed to fleece investors and line the pockets of Wrightson PGG and its directors.

Adolf well remembers cockies telling him in 1983 what a pack of pricks then Wright Stevensons had been in 1935. They foreclosed on a large number of mortgages and forced families off their land.

It seems the brand hasn't improved. Farmers and investors should note well the names of the corporate thieves involved in this mess.


Kieth Smith, Murray Flett, Craig Norgate, John Roadley, John Parker, Graeme Wong


Kieth Smith, Murray Flett, Craig Norgate, Sir selwyn Cushing, Bruce Irvine, Samuel Maling, John McConnon, Timothy Miles, William Thomas.

DO NOT do business with any company, in any industry, which employs any of these people.


Anonymous said...

when they set this company up the directors foolwoed teh Macquarie model of clip the ticket in as many places as possible, as the market at that time was blind to the rip off that the outgoing cashflows are. The untendered and unbreakable nature to many of these management structures are the enterprises' downfall. In and of itself the base business is probably pretty sound, but when the management companies' profits run contrary to the base assets' then you have problems.
All avenues for extinguishment of the management contracts should be pursued once the diretors of NZS uruguay have been purged by the shareholders. The business' very livlihood depends on it.
Having talked to a friend who visited one of the guys who recognised the opportunity, and then had the idea appropriated by pggwrightson, things at the farm front are turning around, and the rain has started falling again, so production is improving.

homepaddock said...

We visited one of FSU's farms a couple of years ago and were so unimpressed we sold our shares in the company when we returned.

From what Gaynor says nothing has improved since then.

PGW's ticket-clipping is part of the problem but FSU is at fault too. You can't just pick up systems which work here and expect them to work in another country with a different climate, language and culture.

Adolf Fiinkensein said...

You's also wonder why they would want to give away out competitive advantage to South Americans. One could have expected after five years that the locals would cotton on and copy.

I'm quite glad they've fallen on their arses, the same way as do most corporate farms.

pdm said...

So the Wright Stephneson name rears it's head again. When I was a young fellow in CHB in the 60's they did not enjoy the best of reputations. The other Stock and Station companies who had some sort of ownership of the Waipukurau saleyards would not let them sell there.

Having said that they obviously had a group of loyal clients as they continued to survive and grow their business.

Anonymous said...

What a shower. Felching, thieving, conniving, self-serving shower.

And thick with it. Did they think that people would not see in the end?

Any shareholder's hope is that the Singaporean group have a higher sense of honour and they take the show over or get out altogether rather than sit at the same boardroom table with these wide boys

Anonymous said...

My father is on the board of PGG Wrightson, how dare all of you call him a thief. Why don't you get your facts straight including Brian Gaynor's before you sound like idiots!