Of that amount, the biggest shareholder, Agria Corporation of China, will receive $103.7m.
Each share held on July 31 will be split in two and one will be cancelled with the shareholders getting 31c for each share cancelled on August 2. That will leave shareholders with the same number of shares.
But once the capital return is completed shares will be consolidated. One share will replace every 10 shares held, chairman Rodger Findlay said.
PGW shares spiked up 3c to 56c when the details were announced.
Initial High Court approval of the process has been received and the shareholder vote will require a 75% support level for it to proceed. That is a formality given the sale of the seeds business got 96% of the votes cast. The sale was completed in May.
Once the capital return is completed, the remaining business, the retail, water and agency divisions, is expected to have core debts of $25m to $50m for the 2020 financial year. That is considered appropriate given the group’s earnings and balance sheet and the expected variables in cashflows resulting from weather and commodity price influences.
As well as core debt PGW is expected to have about $70m of seasonal debt to cover working capital requirements, mainly from October to January for the sale of spring inputs to farmers.
As that debt is forecast to reduce to zero each year it will not affect banking arrangements, Findlay said.
Operating cashflows for the 2020 year are forecast in the $20m to $30m range.
Inflows are forecast to be applied to investing in the businesses and in dividend payments.
If more capital is needed for the likes of an acquisition, new equity might be needed but Findlay said the risk of that is low because there are no imminent opportunities the board is aware of.
The scale of the capital return is based on PGW retaining a degree of financial flexibility to absorb unexpected short-term cash outflows, he said.
A May 31 balance sheet shows cash of $203.4m, total assets of $613.28m, total liabilities of $213.4m, and shareholders’ funds of $339.9m.
After the capital return the cash figure will reduce to $1.16m, total assets to $411.3m, liabilities rising to $245m and shareholders’ funds will be $165.9m.
Term bank debt will rise to $31.7m.
As well as the payment to Agria the PGW statement shows H and G, the investment company owned by PGW director David Cushing and his father Sir Selwyn, will receive a $6.2m return on its shareholding.
The one-for-10 share consolidation means PGW will have 75.48 million shares on issue, down from 754.84 million shares now.
