GPG back in Tower deal as underwriter
Tower Limitedconfirmed today that Guinness Peat Group (GPG) will act as underwriter to its NZ$210.8 million ($185 million) recapitalisation raising despite the latter having its own rights issue proposal overlooked last week for what the Tower board deemed a more equitable option.
GPG andJB Were- the organising broker - have until Friday to compile a panel of sub-underwriters, however Tower, which must approve the nominations, anticipates the matter will be concluded within the next day or so.
Last week Tower, which is looking to reduce its more than $400 million of debt obligations, opted for the alternative recap proposal put to it by First New Zealand Capital and Credit Suisse First Boston on the basis that it was a “fairer” option for all shareholders.
The proposal consists of a fully underwritten pro-rata four for three rights issue at a price of NZ$0.90 per share.
Tower shareholders on Friday - voting 82 to 18 per cent - passed a resolution to remove its single stakeholder limit of 10 per cent put in place after its 1999 demutualisation, and paving the way for the proposal to proceed.
Meanwhile Tower Australia has consented to anAustralian Securities and Investments Commission(ASIC) order in the Federal Court pertaining to underpaid investors in Tower Blue Ribbon products.
According to ASIC, the court declared Tower had engaged in misleading and deceptive conduct since early 1993, by sending annual statements of account to some investors that recorded incorrect redemption or withdrawal benefits and letters to some investors incorrectly stating that the amount of the cheque or the deposit represented the sum total of the investors' redemption or withdrawal benefit.
Tower estimated the cost of repaying policyholders is about $600,000, and has made provisions to cover the repayments.
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