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Tower Ltd shareholders today agreed to a proposal to separate the company's New Zealand and Australian businesses.
The company said each of four resolutions put to a special meeting at Te Papa in Wellington was carried on a show of hands. The shareholder decision will now be put before the High Court in New Zealand for final approval.
Chairman Keith Barton told the meeting the separation of the financial services firm's New Zealand and Australian businesses had the potential to create future value for shareholders.
The two businesses had different characteristics, operations and strategies and did not gain natural operational synergies from working together, Mr Barton said.
The separation would enable each company to focus on its own strategies for growth with direct access to funding and capital markets as needed.
That was expected to provide greater longer term value in the separate businesses.
Under the separation proposal, Tower will transfer all its shares in Tower Australia Group Limited (TAL) to Tower shareholders on a pro-rata basis of 0.6511 TAL shares for every Tower share held.
TAL's shares will then be listed on the Australian Stock Exchange, due on November 21.
In return for that transfer, Tower will cancel 0.476 Tower shares for every Tower share held by each Tower shareholder.
Secondly, following the separation, TAL will undertake an entitlements offer to raise A$160 million ($185.9 million).
As part of the proposal, TAL will separately borrow new external bank debt of A$150 million, of which only A$135 million will initially be drawn down. Tower New Zealand will borrow new external debt of $85 million.
The proceeds of the new capital and debt will be used to repay all Tower's current external debt, to repay all intercompany advances between the Australian and New Zealand businesses and to provide capital to support the future growth and new business development of both TAL and Tower New Zealand.
Under the entitlements offer, TAL shareholders will be given entitlements to buy 0.4269 TAL shares for every TAL share held on November 27, at a price of A$1.60 per TAL share.
Tower's major shareholder, GPG, will underwrite the entitlements offer.
All Tower's directors recommended shareholders vote in favour of the separation.
A separate resolution before the meeting proposed to grant four million options in TAL to Jim Minto, chief executive officer and managing director of Tower Australia.
Tower shares were down 4c to $3.46 in early afternoon trading today.
- NZPA
