Brierley climbs Tower ladder

By Geoff Senescall

Brierley Investments has taken a $10 million punt on Tower Corporation.

The move flies in the face of Brierley's new strategy of exiting non core assets and only investing in companies ranging in size of between $200 million and $1 billion.

But despite this move to clean up its act, the Tower register shows that Brierley has bought 1.7699 million shares through subsidiary company Portfolio Management.

Like many other new Tower shareholders who bought shares in the float, it too is showing a paper loss on the investment.

Yesterday the Tower price closed down 5c at 550c. At no point since listing on September 28 has the Tower price gone above the issue price of 565c. In recent days it has traded as low as 505c.

Brokers were dumbfounded by the investment especially as the company had just gone through a painful restructuring.

While they expected Tower to ultimately rise above its issue price, it was not a good look for Brierley under its present circumstances.

The fact that Brierley has just under three billion shares on issue meant that even if the Tower price did rise above 565c a share the impact would be insignificant.

Unless there was game plan, the investment didn't make sense, brokers said. However, Tower is not believed to be a core asset.

Meanwhile, Brierley shares continued to come pressure, falling 2c to 42c despite the company being in the midst of a share buyback. Brokers pointed to concerns over the group's Indonesian asset Asia Power.

They noted a recent report in the Wall St Journal about further troubles with Indonesian power assets commissioned by the former Suharto government. In the latest case a US-Japanese consortium, which includes California-based Edison Mission Energy, is being sued over allegations of unfair pricing of a power supply contract.

This latest revelation comes as local analysts have been upgrading their valuation of Brierley's Indonesian project to as high as $150 million, which equates to 5c a share.

* Brierley bought a further 2.5 million shares in its share buy back yesterday , at 43c. It now has bought back some 52 million shares through three brokers, Esam Cushing, Solomon Smith Barney and J B Were & Son. It has said it will buy up to 100 million shares at prices up to 50c.