Panel clears GPG underwrite of Tower, but tightens conditions

By PAULA OLIVER

The Takeovers Panel has given the go-ahead for Guinness Peat Group to underwrite Tower's recapitalisation, but with more stringent conditions.

The panel began looking at GPG's underwriting agreement after a Hanover Group complaint that GPG could end up with more than 20 per cent of Tower's voting rights as a result of its underwriting agreement.

After hearing submissions from interested parties, the panel last night said it had granted GPG an exemption from rule 6(1) of the Takeovers Code.

The decision had been expected by most market observers.

But the panel decided to strengthen the conditions that the corporate raider will operate under.

The panel said it considered it unlikely that GPG would get to more than 20 per cent of the voting rights.

But, if that did happen, GPG would have to decrease its stake to 20 per cent within 30 days of taking up the shares or before Tower next held a general meeting, whichever was the shorter time.

The 30-day sell-down is much shorter than the six months in GPG's underwriting agreement.

The panel said the excess voting rights were not to be exercised before the decrease and it was of the view that the shorter sell-down time was appropriate so that all of Tower's voting rights were able to be exercised within a limited period of the closing of the rights issue.

The panel said it took into account restrictions GPG already faced and decisions made by the Market Surveillance Panel.