Hanover complains to Takeovers Panel over Tower recapitalisation

11.00am

Financial services company Hanover Group today confirmed it had complained to the Takeovers Panel about Guinness Peat Group's (GPG) involvement in recapitalising troubled insurer Tower.

Hanover chief executive Kerry Finnigan today said Hanover had written to the panel about concerns over GPG underwriting Tower's capital-raising.

"We have openly expressed concerns about the level of influence we think that GPG has put on the board at Tower," Mr Finnigan told NZPA.

"We made submissions to the Takeover Panel in respect of the latest GPG proposal.

"Clearly we just want to make sure that things are all above board," Mr Finnigan said.

"It's no more than just advising the panel of concerns we have. I don't know if you want to draw more into it than that."

Hanover, a 4.6 (crct) per cent Tower shareholder, had also unsuccessfully complained to the stock exchange's Market Surveillance Panel (MSP) and sought an injunction to stop last Friday's shareholder meeting.

Takeovers Panel senior executive Kerry Morrell today confirmed the panel was investigating a number of concerns laid by Hanover.

Mr Morrell said he had made a "few calls" in relation to Hanover's complaint, but would not speculate on how the panel would ultimately handle it.

Yesterday the MSP cleared the way for GPG to underwrite Tower's recapitalisation package to raise $210.8 million to help alleviate pressing debts.

The company has $428 million in debt, some $100 million due in early August. The four-for-three rights issue at 90 cents a share would be managed by organising broker JB Were.

GPG is a 9.9 per cent Tower shareholder, but could only increase its stake to a maximum 13.75 now it was underwriting the package, the MSP said yesterday.

The MSP granted GPG a waiver from its listing rule requiring shareholder approval for a related party transaction.

It was also satisfied, after a Hanover complaint, that GPG had not broken another listing rule whereby a shareholder could not increase its stake from an underwriting arrangement.

Hanover failed to stop by High Court injunction a shareholders' meeting on Friday last week that overwhelmingly voted in favour of removing a 10 per cent shareholding cap.

The string of complaints by the company, half-owned by Auckland businessman Eric Watson, prompted GPG director Tony Gibbs to today criticise it as "...hardly a friend of Tower".

"I don't believe Hanover is a suitable long-term shareholder for Tower...," he told National Radio.

"I don't think they have anything to add to this group at all," Mr Gibbs said.

He did not believe Hanover's complaint to the Takeovers Panel would be successful.

"Hanover have frankly been a pain in the rear all the way through," Mr Gibbs said today.

Yesterday, Mr Finnigan said while Hanover was coming to grips with the MSP's findings, it was likely to approach Tower about a possible sub-underwriting role.

Meanwhile, Mr Gibbs downplayed suggestions by the Shareholders' Association that GPG would effectively control Tower as shown at Friday's meeting when not all shareholders voted.

"We're not getting control of Tower. We've got 9.9 per cent of the shares at the moment and through the underwrite the maximum we're allowed to end up with is 13.75 (per cent)," he said.

GPG would underwrite the package for a fee of $5.3 million, or 2.5 per cent of the amount to be raised, plus a management fee of $1.1 million, or 0.5 per cent.

Credit Suisse First Boston and First NZ Capital, who were major backers of the rejected Hanover underwriting proposal, would be included as sub-underwriters in the GPG scheme.

- NZPA