Ceasefire creates a happy man

By PAULA OLIVER

Corporate battler Tony Gibbs last night declared that his fight to underwrite Tower's recapitalisation had been worth the effort.

Guinness Peat Group, of which Gibbs is a director, yesterday confirmed it had been left with 17.1 per cent of Tower's share registry after the completion of the underwriting of Tower's rights issue.

Gibbs, who fought to win the underwriting contract ahead of a rebel group of shareholders, said the focus now had to be on getting Tower back on track.

"Yes, we're happy," he said. "We've collected a rather nice underwriting fee as well."

The Takeovers Panel, which had planned to gather today to consider GPG's deal, cancelled the meeting late yesterday afternoon.

In a statement it said it was satisfied that after fulfilling its underwriting obligations, GPG would not hold more than 20 per cent of the voting rights in Tower.

That meant there were no issues to be considered under the Takeovers Code, and as GPG had agreed to withdraw its legal action against the panel the meeting had been cancelled.

As part of an agreement GPG made with the stock exchange's Market Surveillance Panel during the battle to win the underwriting contract, it was not allowed to go over a holding of 13.75 per cent as a result of the underwrite.

If it did, it had to sell the extra shares within six months and would not have voting rights on them.

Gibbs said yesterday that now meant GPG had six months to sell down to a stake of 15.6 per cent - the difference between that and 13.75 per cent being shares that it bought on market, rather than gained through the underwrite.

But although it had to sell some shares, GPG was not constrained from immediately buying up to 19.9 per cent of Tower.

Many market observers expect it to move swiftly to get to that level.

Tower's $210 million rights issue ended with a shortfall of 44 million shares, 18.9 per cent of the total issue.

Half of those went to GPG, and the rest were divided among a panel of sub-underwriters that Gibbs said were New Zealand institutions and professional investors.

None would be pushed to over a 5 per cent stake in Tower.

Gibbs said the outcome had been good. "Put it this way. You never knew whether you would get to 21 per cent or 17 per cent. It's like looking into a crystal ball - who knows who's going to write the cheque out and put it in the envelope?"

Hanover Group, which had fought against GPG during the underwrite battle, could also reveal a bigger stake in Tower in coming days. It was not part of the underwrite, but bought shares on market when rights were trading.

If it picked up a significant number of rights it would be required to disclose that it had passed its most recently revealed stake in Tower - 6.3 per cent.

Tower shares closed down 6c at $1.23.