Return of $160m signals break-up

Ron Brierley. Photo / Steven McNicholl

The break-up of Guinness Peat Group came a step closer yesterday when shareholders voted in favour of the company returning up to £80 million.

The move is likely to be a sign of things to come over the next three years as GPG plans to sell its New Zealand and Australian assets.

The £80 million ($160 million) will be returned to investors by way of a capital repayment and share cancellation.

But new chairman Rob Campbell said future moves to downsize the company did not necessarily mean more capital repayments.

The mood of the meeting was subdued, with shareholders seemingly resigned to the fact that GPG's days were numbered, despite a better outlook for some of the bigger assets.

Shareholders were left in no doubt that GPG's corporate raiding days were a thing of the past when one asked if GPG no longer wanted to be an investment company.

"That is correct," Campbell said, adding the company was, in effect, winding down.

Despite founder, former chairman and current board member Sir Ron Brierley's previously voiced opposition to a break-up, Campbell said it had the board's unanimous support. Brierley, having vowed never to attend a GPG meeting in New Zealand, was in attendance.

Campbell said GPG's biggest asset, Coats - a leading threadmaker and the world's second largest zip maker - was a good business but one that still faced challenges.

He said Coats was progressing well, delivering a strong result in 2010 and performing ahead of last year in the first quarter of 2011.

Turners and Growers, which had a strong year in 2010, had commenced a strategic review to identify the best options for the business. GPG has a 65 per cent stake. "This asset in our view is a great deal more valuable than is currently recognised in its share price, and it is by no means alone in this respect amongst our holdings," Campbell said.

Other GPG assets in this country include a 35 per cent stake in insurance company Tower and a 19.4 per cent stake in car auction company Turners Auctions. Australian assets include stakes in Alinta Energy, Ridley Corporation and AV Jennings.

In response to questions, Campbell said work was going on for Coats to be an independently listed company. Asked how long it would be before GPG became Coats, he said: "That is one of the potential outcomes, but this is a very complex path that we are on."

GPG has traditionally held its annual meeting in Britain, where Coats is based.

After a shareholder revolt and a long campaign from the New Zealand Shareholders Association, one of the first things on the new board's agenda was relocating the meeting to New Zealand. But Campbell said there was no guarantee that the meeting would remain in New Zealand, given the company's British legal requirements.

The board has been through a highly publicised shake-out, but two of the old guard remain - Brierley and Blake Nixon, who was originally appointed to the board in 1990.

The Shareholders Association, which blames Nixon in part for GPG's underperformance, opposed his re-election.

He was returned with 82.5 per cent of the vote, compared with 99 per cent plus for each of the remaining directors Campbell, Mike Allen, and Gavin Walker, who were also up for re-election.

GPG's shares closed at 83.5c, having ranged between 61c and 86c over the past year.

Story is not over yet, says Brierley

Sir Ron Brierley, the former chairman and founder of Guinness Peat Group, may be down but he's not out.

With just minutes to go before the end of yesterday's annual meeting - the first to be held in New Zealand - chairman Rob Campbell said Brierley had asked to be excused "because he had a plane to catch" and had promptly left by a side door.

Brierley, who had steadfastly opposed moving the meeting from Britain to New Zealand, said after the meeting: "It's happened now and there's not much to say about it."

But the typically cryptic Brierley said there was more to play out in the GPG story. "There is still a lot of water to go under the bridge in terms of the present GPG," he said. "Things are not over yet."

But Brierley conceded that two or three years seemed to be the generally accepted timeframe for GPG's lifespan and that he himself had originally envisaged the company coming to a conclusion.

Asked about how he felt about the phasing out of a company that he founded, Brierley said: "I would prefer to wait and see what does happen over the next two to three years."

GPG - which started out as a corporate raider but ended up as an investment holding company - has attracted several critics over the years for its relative underperformance.

But Brierley said GPG had been a good investment and he knew that from his own experience as a significant shareholder.