Tower's 10 per cent shareholding cap lifted at meeting

12.45pm

Tower shareholders have voted overwhelmingly in favour of raising the company's 10 per cent shareholding cap, chairman Olaf O'Duill told a shareholders meeting today.

The resolution was carried by 82 per cent (44.6 million votes) to 18 per cent (9.7 million), Mr O'Duill told the 300-strong meeting in Wellington.

It had needed a 75 per cent majority to be successful.

The lifting of the shareholding cap was needed so corporate raider Guinness Peat Group (GPG) could increase its existing 9.9 per cent stake as part of a recapitalisation of Tower.

GPG has said it wants to increase its stake in the troubled insurer, possibly up to 30 per cent.

A number of shareholders spoke against the motion, including New Zealand Shareholders' Association chairman Bruce Sheppard, who was dressed as Erik the Viking.

Late on Tuesday, Tower announced it intended to raise $210.8 million through a revised capital-raising plan after an earlier proposal by GPG drew criticism from some shareholders.

Tower said it would raise the money though a fully underwritten pro-rata renounceable four-for-three rights issue at 90 cents a share.

The venture is to shore up its financial position and repay some of its $428 million debt. Tower has believed for some time that its corporate debt is too high, and is due to repay $100 million of it in early August.

The company has a heavy exposure to short-term debt, with its debt maturity profile deteriorating since 2000, when just $17.9 million was due within a year.

Possible underwriters of the alternative capital-raising plan are GPG, First NZ Capital and Credit Suisse First Boston.

Meanwhile, an attempt last night to stop the meeting by 4.3 per cent shareholder Hanover Group failed.

Hanover had sought a High Court injunction on the ground shareholders were not fairly and fully informed to vote on the cap removal.

Hanover, half-owned by Auckland businessman Eric Watson, had earlier expressed concern at GPG's initial capital raising plan, saying it was not fair to all shareholders.

Hanover has said it is looking for a 20 per cent stake in Tower.

At 12.30pm today, Tower shares were up 2c at 147 while GPG's were down 3c at 157.

- NZPA