Anderson appointment a coup for PGW

08-03-2010 | Alan Williams

Sir John Anderson agrees he wouldn't be chairman of PGG Wrightson if the group hadn't been part of the deal that derailed his meat industry taskforce in mid-2008.

"That would be right, but that's life," he says of the events that have led to his appointment as an independent director and chairman, effective from March 1.

PGW's deal to buy a half share in Silver Fern Farms was the death knell for the taskforce brought together, with Anderson as chairman, to try and work out a way to bring industry competitors closer together.

PGW's failure to settle the transaction was the catalyst for its falling into a debt hole and credibility crisis, leading to a major recapitalisation late last year.

As well as the new equity funding, involving a new Chinese cornerstone shareholder, the big listed stock and station agency needed to stage something of a coup in a search for a new chairman to restore its governance image.

Anderson is near the top of any list of eminent New Zealand business directors and is often sought out by governments to crisis-manage problem agencies.

PGW's expanded capital base means it has avoided crisis and its half-year result indicated the start of a recovery phase. The new chairman bought shares in the company during the few days between his appointment and taking the helm.

With the new capital and strengthened balance sheet he says the future looks very promising.

"Stock and station agencies have been round for a long time and will be here for a long time to come. There's a core business servicing farmers and finding them new opportunities, and I think we can build on a terrific base."

Anderson said he could not comment in detail on the company ahead of meeting senior managers this week and reading up strategy papers. However, it had done a great job with its capital raising and rebuilding the balance sheet.

He said the deal with Silver Fern Farms had been impacted by the global economic collapse. "It was an interesting concept which might or might not have worked. I'm not saying it was wrong, but the circumstances were against it."

The Silver Fern deal was driven by then chairman Craig Norgate who, Anderson said, had given PGW a sense of urgency. The company had been invigorated, but to grow quickly meant financing through debt, which always carried risk.

"That didn't work. They've regrouped. It's been a fascinating time and now I'm sure they will survive and grow."

Before taking on the chairman's role, Anderson said he had done "the normal due diligence". "I had no concern at the start and it came out very well."

He has not yet met the directors representing new Chinese shareholder Agria, but said the link was very positive for PGW.

Anderson is enthusiastic about companies linking with Asia and had noticed in his experiences as a director of Australia's most profitable bank, the CBA, that this country has been a bit slower in developing these markets.

"I know in Australia that Asia is looked at with vigour, but New Zealand is not involved the same way."

The new chairman knows the agriculture industry background very well. Aside from troubleshooting roles in the meat industry in the 1980s and again in 2008, as chief executive of the National Bank in the 1980s he catapulted it to the position as number one rural lender in NZ by merging with the Rural Bank.

"I directed the bank to focus on farming, not as a fair-weather friend but to support it, and the ANZ-National Bank now has maintained that ethos."

Anderson says he learned the values of farming as a teenager, with holidays on the Hawke's Bay farm of his uncle Peter Plummer, then president of Federated Farmers.

After his sister married a Waipukurau farmer, he worked on their farm during holidays over a five or six-year period. Those experiences were what influenced his later professional interest in the sector.

He certainly knew the industry well enough not to over-react when the meat industry taskforce worked ended abruptly, saying then that he was not disillusioned by events and was prepared to get involved again if the parties could come together.

He did warn the meat companies then that they shouldn't be trying to "kick the lights out of competitors". If farmer stakeholders weren't looked after, they would make other decisions about their land use.

Anderson has few agriculture-related responsibilities these days, but is busy as a director. Besides being a director of the CBA, he is still chairman of TVNZ and Capital and Central Health, and a commissioner at Hawke's Bay Health (all positions starting out as crisis-control situations), a director of NZ Venture Investment Fund and is on the boards of Wellington sporting and development trusts.

Anderson is also on the executive of the International Cricket Council (ICC), where he has just been headed off by former Australian Prime Minister John Howard for the post as next vice president. That might be the ICC's loss, but PGW's gain in terms of the time he has to devote to his business roles.

Anderson says you make time for these responsibilities. "As a chairman, you make sure you've got the right governance and the right chief executive and the right strategy.

"You don't spend every day there, but will speak to the chief executive about issues. You're there as a sounding board for the chief executive and to keep the board fully informed."

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