Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and NZME. news service.

GPG looks to its options

After buyback company will consider ways to get money back to shareholders.

Chairman Rob Campbell says retail investors have not been big participants in the latest buyback. Photo / Natalie Slade
Chairman Rob Campbell says retail investors have not been big participants in the latest buyback. Photo / Natalie Slade

Guinness Peat Group (GPG), the investment holding company in the final stages of selling all but one of its assets, is considering its options after completing a share buyback yesterday, says chairman Rob Campbell.

Just over 69.5 million GPG shares were bought back off-market yesterday, bringing the share buyback to a close, and raising the question as to what comes next for the one-time corporate raider as it morphs into the GPG flagship - the UK-based thread and zip maker Coats.

"We will now have a look at whether we need a second buyback or some other means of getting money back to shareholders," Campbell said.

GPG has three options: more buybacks, a tender process aimed at individual shareholders or a capital distribution in the form of a dividend or capital repayment.

Campbell said it appeared retail investors had not been big participants in the latest share buyback.

"There is certainly not a rush for the exit by the retail investors at the moment," he said.

GPG, which was founded by Sir Ron Brierley, has been selling assets over the last two years, a process Campbell described as "tortuous".

The company had always envisaged that it would be a three-year programme and Campbell expects the process to be complete by the third quarter of this year.

GPG's largest remaining New Zealand asset is a 33.6 per cent holding in Tower, which is itself is in the process of selling assets.

"We think the Tower process is creating value for us, so we are not in any hurry to resolve our shareholding there," Campbell said.

Tower plans to return $120 million of capital to shareholders, subject to shareholder approval at its annual meeting tomorrow.

Tower has yet to reveal its plans for the $79 million from the sale of its investments business to Fisher Funds last month.

In its heyday, GPG had a wide shareholder base, and still boasts about 17,000 Kiwi shareholders.

Campbell said some investors still bore ill feeling towards the company for its previous lack of transparency and poor corporate governance track record.

"We have changed, but many people nevertheless feel the same way," he said.

"There is an argument that says when you are running an investment company that total transparency is not necessarily in the best interests, but since we started to unpick the old structure we have had to turn that around," Campbell said.

Originally, the market-leading Coats was on the "for sale" list and but the company had a change of heart.

By the end of this year, Coats will be all that is left of GPG, by which time the company's name will most likely change to reflect that.

The primary listing in Britain will remain, as will the company's listings in New Zealand and Australia.

Campbell said the issue would be to create a balance sheet for Coats that works as an integrated entity. The company would then determine how much residual cash was capable of being returned to shareholders.

"We will use some other mechanisms, possibly including a distribution of cash as we get greater clarity on what the Coats balance sheet needs to looks like," he said.

The main concern was the amount of money needed to cover Coats' two pension schemes, for which it has a £125 million ($229 million) obligation, Campbell said.

Since January 2012, GPG's investment portfolio has generated $689 million.

- APNZ

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