GPG to spin-off Australia assets, delay Coats sale

NZ GPG head Tony Gibbs. Photo / Brett Phibbs

Guinness Peat Group, the diversified investor chaired by Ron Brierley, plans to spin off its Australian assets into a separate listed company but will hold off on selling its Coats business to avoid 'destroying value.'

Shares of the diversified investor rose 1.5 per cent to 67 cents having initially spiked up more than 9 per cent after the announcement of the demerger and restructuring, which the company said will "unlock value."

GPG Australia will become "an independent, regionally focussed listed investment company" while the rest of the group is restructured "to facilitate the flotation of Coats in due course," Brierley said in a statement today.

The sale of unprofitable thread maker Coats, GPG's single biggest investment, is expected within the next two years. GPG is pleased with the way Coats responded to the global financial crisis and its performance is "much improved" so far this year.

Still, an immediate sale of Coats "is not in shareholders' best interests given the nascent stage of recovery in relation to Coats' markets and customers and the current uncertainty in relation to international financial markets," it said.

The restructured GPG will retain a listing on the NZX and London stock exchange, focussing on New Zealand and U.K. investments based on its "traditional value-based activist investment approach."

Its portfolio of investments has "considerable upside potential."

The demerging and restructuring would be finalised later this year after further evaluation. It hops to have initial regulatory approvals in place in time to release full details of the plan in September, with documentation sent to shareholders in October and a vote in November.

GPG Australia would have net asset value of about A$450 million, based on the portfolio as at April this year. GPG's post-demerger NAV would be about 570 million British pounds, or $1.2 billion.

The announcement ends along wait for GPG shareholders, who were told to expect details of a value return at their annual meeting in London last month. In the event, they were told there was a longer wait, with the complexities of the group's tax and investments across a range of economies making the task more difficult.

Australian media reported that Sydney-based executive Gary Weiss had lobbied for the split of the Australian assets.