Tower to raise $81m in rights issue

Insurer and fund manager Tower says it is raising $81.3 million from existing shareholders through a rights issue to provide support for the company's organic growth strategies.

Under the rights issue, eligible Tower shareholders can acquire five new shares for every 16 shares held.

The new shares would be offered at a price of $1.34 per share, Tower said today.

The offer was fully underwritten by Goldman Sachs JBWere.

Guinness Peat Group, which indirectly held 34.9 per cent of Tower's issued shares, had indicated it intended to take up its entitlement.

Tower Group managing director Rob Flannagan said the additional capital would provide support for Tower's organic growth strategies and enhance the group's financial flexibility to take advantage of strategic opportunities that may arise.

Tower's fundamentals were sound, as shown by the financial result to March 31, he said.

Satisfactory results continued in the four-month period to the end of July, and, assuming normal and stable trading conditions for the rest of the financial year, the board expected full year underlying profit to be in line with market expectations.

Trading in Tower shares started for the day shortly before noon, following a halt pending the announcement, with the share price down 2c to $1.79 shortly after trading resumed.

- NZPA