GPG New Zealand director Tony Gibbs has publicly spoken out against a proposal to demerge the business, saying the plan should be abandoned in favour of a new approach.
Gibbs released a statement to the New Zealand stock exchange yesterday less than 10 days after the company announced a proposal to split off the Australian assets into a separately listed company.
The proposal was panned by Kiwi investors who said it failed to deliver on a promised value return to investors.
Gibbs said he had supported presenting the demerger proposal to shareholders to find out if they would support it. But it had "become clear" to him the proposal did not have the support of many shareholders and would not succeed.
"Rather than spend the next six months investing time and shareholders' money developing this proposal further or seeking modifications, I believe we should abandon the proposal in favour of an alternative strategy."
Instead Gibbs wants to give investors a material cash payout before the end of the year, restructure the GPG business to allow threadmaking company Coats to be floated and either float or sell Coats next year giving the proceeds back to investors.
AMP Capital head of equities Guy Elliffe said people only needed to look at the share price to see what investors were in favour of.
After the split announcement the price fell by 5c to 61c - yesterday it was back up to 66c.
Rickey Ward of Tyndall Investment Management said Gibbs' statement reflected the mood of the market.
"The present plan should be abandoned immediately and they should adopt a proposal similar to what Tony is proposing."
Ward said he also believed Weiss should be put up for election because he had told investors the board unanimously wanted the proposal to go ahead. "He should resign. He has been inconsistent with his messages to shareholders."
But BT Funds Management portfolio manager Matthew Goodson said he did not believe that one poor proposal should result in the exit of Weiss.
"Some of his historic achievements have been considerable. He has been an integral part of GPG."
Goodson said large elements of Gibbs' proposal made sense but he wanted to know more details on how any cash distribution would be done in a tax effective manner. He also said a buyback should be considered to boost the share price.
A statement released on GPG letterhead to the Australian stock exchange said Gibbs' statement was "not seen or approved" by the board of GPG prior to its release and therefore "does not reflect the considered opinions of the board".
The statement which was signed off by an "authorised signatory" called Philip Tunstall but did not name any of the directors, said the demerger proposal had been unanimously supported by the board and while the company had received a variety of responses, detailed information important to assess the overall merits of the proposal were still being developed and had yet to be released.
"While various details of the proposal are still being worked through, the board is objectively reviewing shareholder feedback before considering what modifications (if any) should be incorporated."
Chairman Sir Ron Brierley was in London yesterday while British based director Blake Nixon was understood to be flying back from India.
GIBBS' PLAN
* Give investors a material cash distribution before the end of 2010.
* Structure GPG Group to allow the Coats business to be exited.
* Prepare for the trade sale or float of Coats as soon as possible after the end of the December 2010 financial year.
* Return proceeds of Coats sale or float to investors.
Abandon GPG split, says Gibbs
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