Shareholders endorse Tower's spin-off

Olaf O'Duill faced just three questions at yesterday's special meeting in Wellington. Picture / Mark Mitchell

Tower shareholders yesterday rubber stamped the company's $10.6 million plan to list its Australian Wealth Management (AWM) unit on the Australian Stock Exchange.

Chairman Olaf O'Duill faced just three questions from about 100 shareholders attending a special meeting at Te Papa in Wellington.

Three elderly shareholders voted against the spin-off and an agreement that will see Guinness Peat Group, Tower's 19.91 per cent shareholder, paid A$2.3 million ($2.48 million) to underwrite an AWM rights issue.

O'Duill said splitting Tower and AWM into two would realise the potential underlying value of both businesses. Tower will focus on insurance and funds management and AWM on wealth management.

"It will also enable shareholders to choose whether to invest in Tower or in AWM, or in both," O'Duill said.

AWM will buy the Tower Trust and Bridges businesses from Tower for A$130 million cash and 120 million $1 AWM shares. The A$130 million will be raised through a renounceable rights issue of additional AWM shares in February.

Tony Gibbs, one of GPG's two representatives on Tower's board, said GPG could end up with more than 19.91 per cent of AWM if other shareholders shun the rights issue.

Tower's independent adviser Grant Samuel said there is likely to be some transfer of value to GPG.

But Gibbs said he expected GPG might only gain an extra 2-3 per cent. It will be able to keep whatever AWM stake it gets.

Gibbs said the spin-off was in the best interests of all Tower shareholders.

"If we ask in a month 'are Tower shareholders financially better off', I believe they will be," Gibbs said.

The spin-off is costing $10.6 million,with AWM coughing up A$4 million and Tower the balance. Of 82.16 million proxy votes, 93.5 per cent voted for the spin-off and 83.1 per cent for the GPG underwriting plan.

The deal

Tower shareholders have voted to split off the insurer's Australia-based Bridges Financial Services Group of financial advisers and related services and its Australian trustee company into a separate vehicle, Australian Wealth Management (AWM).

The deal involves A$120 million worth of AWM shares being distributed pro-rata to Tower shareholders who will then be asked to subscribe to a A$130 million rights issue.