Hanover: We're not going to go away

By PAULA OLIVER

Jilted Tower shareholder Hanover Group has increased its stake in the struggling insurer and issued a clear message to its rivals - we're not going away.

Hanover disclosed to the stock exchange yesterday that it had moved to a 6.3 per cent holding in Tower.

The news came on a day when Tower revealed it had sold its local trustee arm for $25 million, and as buyers began snapping up rights which began trading as part of the insurer's $210 million recapitalisation.

Hanover chief executive Kerry Finnigan was coy when asked whether his company planned to further increase its stake by targeting the rights trading.

"I don't know if it would be appropriate for me to say at the moment," he said.

Hanover has been shut out of the panel of sub-underwriters for the Guinness Peat Group-led recapitalisation.

The financial services group, which is half-owned by Eric Watson, yesterday learned officially that it was not part of the panel - after GPG director Tony Gibbs had repeatedly vowed that this would be the case.

Finnigan said he was disappointed by the news, particularly because Tower's board had been involved in the formation of the sub-underwriting panel.

"We have to again raise concerns as to the influence that GPG has over this board," Finnigan said. "We're a significant shareholder in the company. Again, we're disappointed, and concerned about some of the actions going on within the company."

Finnigan said he had been in contact with Tower over the past week and the company was well aware that Hanover wanted to be involved.

He would write to Tower to express his disappointment.

"We'd like to think the Tower board are going to wake up and realise that we're not going to go away. They're going to have to talk to us."

Tower group managing director Keith Taylor was overseas and could not be contacted last night.

The Takeovers Panel has yet to issue its decision on whether GPG will be granted an exemption to proceed with its underwriting plan.

Trading in Tower rights and shares was busy yesterday.

The share rights debuted at 26c before ending the day at 30c, on a turnover of almost 4.8 million. More than 3.8 million Tower shares also changed hands, before closing at $1.20.

Macquarie NZ investment director Arthur Lim said he had a suspicion that some speculative buyers had been involved in trading on the hope that Hanover's move spelled the start of a bidding war.

"But I think that's a bit premature."



Lim said Hanover might be looking to secure a 10 per cent stake in Tower to block, or at least have involvement in, any sale or takeover activity.

Tower hogged the spotlight further yesterday in announcing the sale of its trustee business for $25 million. The board will sell Tower Trust New Zealand to US-based private investment company Sterling Grace Corporation on July 31.

In a statement, group managing director Keith Taylor said that although the business was profitable, it did not fit Tower's plans. Its sale was part of Tower's efforts to turn around performance.

Sterling Grace approached Tower to buy the business and was given exclusive due diligence rights.

Tower withdrew Tower Trust from sale in November last year after several parties conducted due diligence and submitted bids. Tower said it had decided that keeping the business would be the best use of shareholder capital.