Wellington, Aug 27 NZPA - Rural services company PGG Wrightson says it may need new capital after posting a net loss of $66.4 million for the year to June 30, down 190.8 percent on its profit of $73.2m last year.

The company earlier this year went to its bankers for a waiver on its potential breach of financial covenants, and today announced that renegotiation of the terms of its loans means it is "also considering the sale of selected assets and a potential equity-raising".

"Any equity-raising is likely to involve both existing shareholders and new investors, and may also include the introduction of a new cornerstone shareholder," chairman Kevin Smith said.

Wrightson has hired First NZ Capital and UBS merchant banks to help in its review and will provide a further update on its plans for meeting the new bank debt.

The company's debt due within one year has jumped to $445.04m ($174.2m last year) with a further $71.5m owed for its finance arm (nil last year).

Its re-negotiated banking package has allowed $197.9 million debt maturing more than 12 months from June 2009 to be reclassified as term debt.

Bankers have provided a term debt facility for that amount maturing on August 31, 2012, (previously $275 million expiring September 30, 2011).

Its most immediate pressure comes from a loan of $200 million due to be fully repaid by March 31, 2010 -- previously $125m expiring in December 2010 -- and working capital of $75m that matures on August 31, 2011, which was previously due to mature in April 2010.

It has overdraft and guarantee facilities of $40 million, and South Canterbury Finance has agreed to extend its debt to February 2013.

Wrightson blamed some of its bad news on non-trading items such as fair value adjustments on investments ($50.4m) and the $49.6m it paid Silver Fern Farms after bungling a $200m merger.

Mr Smith said the results were hurt by a $39.214m writedown in his company's investment in NZ Farming Systems Uruguay Ltd (NZFSU): its stake of about 11 percent was worth $50.95m last year but is now on the books at $12.89m.

Mr Smith -- who also chairs NZFSU -- yesterday posted a net loss of $US45.9 ($NZ67.79) million ($US8m last year) for that company over the same 12 months.

He said then it was hoped that by 2012 it would have infrastructure such as irrigation and electricity lines built and that higher stock levels, increasing milk production and better returns, will boost on-farm returns.

Today, Mr Smith said PGG Wrightson's net operating earnings after tax (nopat) was $30m ($32.9m last year) and its earnings before interest, tax, depreciation and amortisation (ebitda) $76.7m ($89.2m).

The result "confirms the underlying strength in the business" despite the effects of global recession and significant slowdown in dairy activity, he said.

Customers had responded to the tougher market conditions and outlook by seriously reducing their "spend", particularly during the June quarter when the battle for reduced business put pressure on margins.

Parts of the business exposed to dairy in New Zealand, Australia and Uruguay had "suffered accordingly".

The group also experienced increased financing costs following the renewal of facilities during the financial year.

Mr Smith suggested comparing trading performance on the basis of nopat, which excluded one-off and non-trading items, and showed an 8.8 percent drop from last year.

When $96.4m of one-off items -- largely non-cash matters such as fair value adjustments, and provision for the Silver Fern settlement -- were taken into account, the net loss after tax fell to $66.4m.

Revenue for the year at $1.269 billion ($1.212b) remained relatively strong, operating cashflow of $52m compared with $26.3m the previous year, and total assets of $1.5 billion were in line with last year.

Managing director Tim Miles said the company was well-placed to take advantage of the upturn in trading conditions "when it occurs".