Brierley Investments' exit strategy from LWR Industries received a blow when an independent appraiser called a takeover offer for the struggling apparel and textiles manufacturer too light.
On the back of the report, independent directors, who include former Brierley executives Bruce Hancox and Trevor Kerr, wasted little time inadvising LWR shareholders to reject the 106c a share bid.
The takeover offer was made this month by CHL New Zealand - a consortium backed principally by multi-millionaire New Zealand-born academic David Teece.
Both Brierley (LWR's 63 per cent shareholder) and CHL were reserving their judgment yesterday until they had had time to analyse the report.
Brierley has long been trying to sell its holding with little success. The deal with CHL would see the minorities taken out at 106c a share and Brierley handcuffed to LWR for two years at the same price.
Appraiser Arthur Andersen said it considered a conservative range of values for LWR to be between 128c and 155c a share. It based this range on expected tax-paid profit for the year to June 30, 1999 of $5.7 million and an after-tax profit of $6.32 million the year after.
The projected increase in earnings is despite LWR losing the valuable contract it had through its Canterbury brand to supply the All Blacks.
LWR's independent directors said they believed the company could continue its existing 10 per cent dividend policy.
This flies in the face of earlier comments by both Brierley and CHL, which were of the same view that, whatever happened, the LWR dividend would be axed.
