Tower shares have been halted ahead of tomorrow's annual earnings announcement, where the general insurer will unveil details to raise new capital.
The Auckland-based company last week said it planned to raise new capital when terminating a takeover deal with Suncorp Group's Vero Insurance, with the two insurers preparing toappeal a rejection of their transaction by the Commerce Commission earlier this year.
"The trading halt has been put in place as Tower Limited is at an advanced stage of finalising underwriting for a capital raising to be announced with its audited financial results on 14 November 2017," NZX said in a note to the exchange. "It wishes to ensure an orderly market while the offer terms, and sub-underwriting pricing and allocations with market participants, are finalised in the next few hours."
Tower's need for more capital emerged as it struggled to cope with escalating costs from the 2010 and 2011 Canterbury earthquakes, and a proposed restructure carving out of those liabilities into a separate entity shook out two suitors. Suncorp's Vero ultimately beat out Canada's Fairfax Financial Holdings in a bidding war for Tower, offering $236 million, or $1.40 a share, but was blocked by the regulator over fears it would stifle competition.
The insurers had planned to appeal that ruling, but Vero walked away when Tower terminated their arrangement, while leaving the door open for it to be renegotiated.
