GPG application invited

By PAUL PANCKHURST

The Guinness Peat Group deal to rescue troubled insurer Tower faces yet another hurdle - but this one looks like an easy jump.

The Takeovers Panel yesterday revealed that it had invited the corporate raider to apply for an exemption to takeover rules that could have blocked the $210 million capital-raising package.

The issue, in the panel's view, is the possibility of GPG's underwriting agreement pushing it - even temporarily - past a 20 per cent stake in Tower, a breach of the Takeovers Code.

But the invitation to seek an exemption - with panel comment that the agreement has had "rigorous scrutiny" from the Market Surveillance Panel - indicates GPG is unlikely to stumble.

The panel has asked for submissions from interested parties by 9am on Monday - the day that rights start trading for Tower's pro rata four-for-three rights issue.

The panel said GPG had been invited to apply for an exemption "so that any regulatory doubts over this aspect of Tower's recapitalisation would be removed".

The panel met on Wednesday to consider the underwriting agreement, which attracted complaints from the Eric Watson-linked Hanover Group.

Under the arrangement sanctioned by the stock exchange, GPG cannot retain more than 15.6 million of the shares that it obtains via its underwriting obligations.

The deal provides for GPG to divest any surplus within six months.