China's Agria Corp is to tighten its grip on PGG Wrightson through punching above its weight in a capital raise and supporting the New Zealand group's finance arm, taking its total investments to NZ5m (USm).

The seed developer and animal breeder, which last month bought an 11% stake in PGG Wrightson, revealed that it will raise its stake to about 19% through injecting a further NZm.

Agria will not only buy the rights it is entitled to through the heavily-discounted NZm cash call PGG Wrightson unveiled on Friday.

It will also take up some of the rights allotted to Rural Portfolio Investments, currently Wrightson's biggest investor, which said it could not afford to take up all its entitlement.

Shareholder backing 

This could potentially add a further 8.3% to Agria's stake.

"Agria may end up owning more than 20% of the company � but this will require shareholder approval and regulatory approval," Wrightson said.

Debt burden 

The announcements follow a grim period for Wrightson which, sapped by falling commodity prices and the poor performance of a dairy joint venture in Uruguay, has found its debts increasingly burdensome.

Most of the capital raised through Friday's initiatives, and Agria's initial investment, will go to pay a NZm loan falling due in March.

Total debts repaid in the year to next June are expected to hit NZ7m, "comfortable exceeding the debt repayment schedule agreed with [our] banking syndicate earlier this year", Wrightson said.

'Difficult trading conditions'

Keith Smith, the Wrightson chairman, said the debt repayment would ensure that the group was "appropriately capitalised for the current economic and trading environment".

Tim Miles, the group's managing director, said that while the company was still suffering "difficult trading conditions" it was "making continued progress through improvements to its operating performance and efficiency".

Wrightson shares closed down 2.1% at NZ.47.

In New York, Agria stock closed down 4.3% at .35.