Royal ups support of GPG in Tower bid

By Richard Braddell

WELLINGTON - Royal & SunAlliance is not ruling out continuing Guinness Peat Group's efforts to wrest control of Tower Corporation.

Royal's stance took on additional piquancy yesterday when Tower's managing director, James Boonzaier, revealed GPG would next week ask the Privy Council to allow it to reopen earlier unsuccessful attempts to have the Tower bylaws governing its demutualisation process ruled as being outside the scope of its founding legislation.

If allowed to proceed, the claim, now well out of time for leave to be granted by the Court of Appeal, would be heard in conjunction with GPG's June 23 appeal against the Court of Appeal's upholding of the demutualisation scheme.

But while Mr Boonzaier said that Royal had taken pride in not having made a hostile takeover in its 300-year history, Royal's global chief executive, Bob Mendelsohn, told the Business Herald that its intentions towards Tower could not be determined until it had control of GPG subsidiary Tyndall Australia.

"We will obviously take a hard look at Tower and their position and will make an appropriate decision once we get into the position to make the decision," he said.

Royal's expansion ambitions in this region have been no secret, and Mr Mendelsohn yesterday described areas like Australia and New Zealand as "winners" where it could get the appropriate return on capital.

However, Mr Boonzaier said it would be unwise to make a hostile takeover since financial services was a people business dependent on close relationships, which would be destroyed in a hostile situation.

Mr Boonzaier yet again confessed to being puzzled that GPG was continuing with its action.

However, he also revealed that the GPG assault had been conducted through GPG International, a vehicle which had been transferred into Tyndall during 1998.

The result is that Tyndall, and by inference, Royal, inherits the right to continue to promote GPG's alternative scheme of demutualising Tower by merging it with Tyndall.

Mr Mendelsohn said Royal had gained acceptances for 50 per cent of Tyndall and was quickly climbing to the compulsory acquisition threshold of 90 per cent.

But even if there were an arrangement for Royal to inherit GPG's action, it is not clear what GPG would gain.

GPG's founder, Sir Ron Brierley, has previously been reported as saying its efforts to derail the Tower demutualisation were in keeping with a role as a "public benefactor".

Mr Boonzaier said Royal's Part B takeover statement for Tyndall, issued under Australia's Corporations law made it illegal not to declare any "benefit" that might be received, and that extended even to the reimbursement of legal expenses that might be incurred. No such benefit had been declared.

Mr Boonzaier said Tower's litigation expenses would be a fraction of the "millions" estimated as being incurred by GPG, since Tower had to do much of the work to gain demutualisation approval anyway.