There might be expectations the Cushing family investment vehicle H and G increasing its shareholding and David Cushing becoming a director will lead to further corporate activity at the country’s biggest rural services group once the already agreed sale of the PGW seeds business is completed.
H and G has a strong agri focus and a track record for corporate change in NZX-listed companies, notably the events leading to the formation of PGW in the early-2000s and since then at Tourism Holdings and recently at Skellerup.
PGW deputy chairman Trevor Burt, independent audit committee chairman Bruce Irvine and independent director John Nichol will leave the company on April 30.
Irvine has been a director since 2009, Burt since 2012 and Nichols since 2013.
No reasons were given for their departures. Burt has effectively led PGW in recent times, especially during the process leading to the agreed sale of the seeds business to Danish group DLF Seeds.
The departures are sudden and the timing is interesting, given the sale is still subject to Overseas Investment Office approval. The sale for about $431 million will provide a one-off profit of $210m for PGW, which has suggested a capital return to shareholders of up to $292m is likely.
Irvine wouldn’t comment on the trio’s departure but is confident the sale will be completed.
Controversial Chinese group Agria remains a 46% owner of PGW shares but is in the process of selling a 2.2% stake of 17m shares to H and G at 49c a share. That will make H and G the owner of just over 20m shares and the fifth biggest shareholder. The deal is subject to conditions.
David Cushing jointly owns H and G with his father Sir Selwyn Cushing and will join the PGW board on April 30. Investors should be encouraged by his involvement as a significant minority shareholder.
Through H and G and other entities the Cushings also own about 70% of corporate farmer Rural Equities, whose farms are major PGW clients.
David Cushing is Rural Equities’ executive chairman and his deputy chairman there, Rodger Findlay, will also join the PGW board, as its incoming chairman. He has a background in investment banking and farm ownership and has spent the last decade in business governance roles including a current directorship at Ngai Tahu Holdings, which owns about 4% of PGW. Findlay was also some years ago an outside expert on PGW’s short-lived agritech committee.
The Cushing family controlled North Island rural services group Williams and Kettle was merged into PGW before the 2005 merger with Pyne Gould Guinness, which formed the current PGG Wrightson.
One of PGW’s best businesses, Fruitfed Supplies, was part of Williams and Kettle. Sir Selwyn spent several years as a PGW director after the merger.
The third new PGW director is Sarah Brown, a Southland commercial lawyer with governance roles in the electricity sector and a former chairwoman of the Southern Institute of Technology.
Cushing, Findlay and Brown will be considered independent directors though Cushing was an alternate director for Agria for a time around 2010 when it was taking control of PGW.
Agria is represented on the PGW board by current chairman Joo Hai Lee who will become deputy chairman when Findlay takes over as chairman and also by U Kean Seng. Ronald Seah remains as an independent director.
Agria and its executive chairman Alan Lai have spent the last few years facing action from the United States Securities and Exchange Commission. That action, relating to events in the US and China, was settled in December with Agria and Lai paying a US$3m fee. The company was earlier also made to delist from the New York Stock Exchange.
Irvine, who led PGW’s independent director committee overseeing Agria’s relationship with the SEC, told the NZX the events did not involve PGW.
Agria was also subject to an OIO action in NZ, during which it agreed to reduce its stake in PGW from just above 50%. That led to the sale of shares to Ngai Tahu, which had previously been an investor in Agria Singapore, through which the PGW-stake is held.
A subsequent High Court case found Agria had breached good character conditions required of foreign investors in NZ. It required Agria and Lai to each pay $100,000 as a civil penalty and $30,000 court costs.
