Guinness Peat Group's Tony Gibbs has heeded the calls of local investors and backed away from a proposal to carve out the Australian assets into a separate listed entity.
Gibbs, a director of the diversified investment company, said it's become clear to him that the proposal doesn't have the support
of many shareholders and won't succeed, so he's going to go out and rally support for an alternative plan.
The Gibbs plan would see GPG make a "material cash distribution to shareholders" by the end of the year. It would also restructure the group to enable an "efficient exit" from UK threadmaker Coats in preparation for a trade sale or float next financial year, the proceeds of which would be returned to shareholders.
"It's an open secret there's been some conflict on the matter, and it's fair to say the response in New Zealand has been less than enthusiastic," said Alan Moore, who helps manage $600 million at Milford Asset Management. Gibbs' proposal "looks a little more clear cut (than the demerger) and probably would be more attractive" to local investors, he said.
Last week, GPG put forward a proposal to carve out its Australian assets in a separate listed company controlled by Gary Weiss, while the rest of the group would be restructured to facilitate the eventual float of Coats.
The plan was roundly panned by New Zealand investors, who couldn't see much benefit for kiwi and British shareholders.
The shares jumped 4.7 per cent to 67 cents on the NZX today, and have tumbled 16 per cent this year as shareholders got fed up with the delays to chairman Ron Brierley's plan to return value to investors.
Moore said one of the major problems of the initial proposal was the lack of detail around restructuring the English and New Zealand units, and how that would affect the company's governance.
