Hanover considers legal bid for seat on board

By PAULA OLIVER

An armwrestle over boardroom seats at Tower is far from over, with jilted shareholder Hanover Group examining legal avenues to gain representation.

One of its options is to call a special meeting of shareholders and attempt to win a vote for a seat.

Hanover holds a 9.7 per cent stake in Tower and has made no secret that it wants representation at the boardroom table.

It is the second largest shareholder in Tower behind Guinness Peat Group, which holds a stake of 17.1 per cent and has two directors on the board.

But despite Hanover's overtures and the fact that Tower has had three vacant board seats, it has been rejected.

Rubbing salt into the wound was an announcement late last Friday that two new directors had been appointed.

One of them, Maurice Loomes, has been closely aligned to GPG for years - sitting on its board until 2000 and on several other boards with GPG leaders Sir Ron Brierley and Gary Weiss.

Hanover yesterday claimed that the appointment of Loomes effectively gave GPG three directors on Tower's board of eight, a number well out of proportion with its stake. GPG was being allowed to control Tower from a minority shareholding.

"This is very difficult and very annoying," Hanover executive chairman Mark Hotchin said.

"Unfortunately the job to change this is, from a legal perspective, reasonably difficult. But we are certainly investigating that."

Peter Webb of the New Zealand Institute of Directors yesterday said it was not normal practice for a shareholder to step into a seat just because it held a 10 per cent stake - factors such as expertise and the contribution a person could make to a company also had to be considered. So did the potential for directors to work well together.

But if a shareholder had a "reasonably substantial amount of a company" it could begin to expect a board seat, he said.

"There's no hard and fast rule, and no legal requirement," Webb said.

Other market observers said that a shareholder could reasonably begin to expect a seat if it held a 20 per cent stake.

Tower chairman Olaf O'Duill has labelled Hanover's attitude as "nonsense".

He said Hanover had never contacted him personally to chase a seat, and one of his concerns was that its representatives would not work well with GPG directors because of a history of battles between the two.

O'Duill is expected to make the last appointment to Tower's board within a month.

Shareholders Association chairman Bruce Sheppard yesterday said O'Duill should find a way to be inclusive and put a Hanover representative into that seat.

"If Olaf can't do that, he'll be in for a rougher ride than he has been already. It's inappropriate for him to treat Hanover with such disrespect."

Hotchin said that calling a special meeting to seek a seat was an option, but it would be difficult to win a vote because of the size of GPG's shareholding.

He said Hanover had begun talking to Tower's other shareholders to see whether it could garner the support needed to win a seat.

He was confident that a Hanover representative could work constructively with GPG's directors.

"There's absolutely no doubt of that, assuming that they want what is in the best interests of Tower. This is a large investment for us and we don't want to jeopardise it."