Investors welcome GPG's moves

By Jenny Ruth

Friday 11th February 2011 1 Comment

Investors are welcoming Guinness Peat Group's plan to wind down the company in an orderly fashion with the possible exception of its largest asset, Coats, and to start returning capital to shareholders.

"The independent directors are clearly doing what the shareholders wished them to do," says John Hawkins, chairman of the NZ Shareholders' Association.

Hawkins is particularly pleased the next annual shareholders' meeting will be held in June in New Zealand, something his association and other investors had been asking for for years. GPG had previously told everyone the annual meetings had to be held in London where GPG is incorporated but today's announcement shows that isn't so.

"It's absolutely clear from this that they never bothered to look into the situation and just thumbed their noses at shareholders," Hawkins said

He notes the statement doesn't say the GPG board's decision was unanimous.

"The three encumbent directors (Sir Ron Brierley, Gary Weiss and Blake Nixon) should note that shareholders expect them to work diligently to ensure that the new strategy is successfully implemented. Otherwise, we will have no hesitation in seeking to have them removed and replaced with people who have the shareholders' interests at heart," Hawkins says.

Four new directors, including new chairman Mark Johnson, were appointed in September after a widespread shareholders' revolt at the way GPG was being managed. The new directors were charged "to evaluate all available strategic options to enhance shareholder value."

The plan announced today includes returning at least 75 British pounds (NZ$158 million) to shareholders before the end of 2011 and shareholders will be asked to vote on this at the AGM. GPG estimates it has about NZ$1.3 billion worth of assets in a number of countries besides Coats, has shareholders' funds in excess of NZ$1.95 billion and more than NZ$357 million in cash as at September 30.

Guy Elliffe, head of equities at AMP, says the plan is "pretty encouraging. It looks pretty encompassing.

"The independent directors look like they've done a pretty good job."

Rickey Ward at Tyndall Investment Management says he's pleased the new directors are making progress. "This is a step in the right direction."

What he had wanted was to have proper corporate governance in place and work done to reduce the big discount GPG shares trade at but he doesn't want to see GPG disappear completely as a listed company.

"I do believe it had got too large and it hadn't delivered value to shareholders for several years."

Hawkins also says getting the corporate governance put in place was crucial to allowing value to be realised for shareholders.

He welcomes the board's plan to search for a chief executive. "At the moment, it's a many-tentacled monster and there seems to be no one ensuring all the tentacles move in a co-ordinated way."

Comments from our readers

On 11 February 2011 at 3:03 pm Christopher said:

Good - i don't accept Mr Ward's statement that the company had got too big, more likely certain people got too comfortable. Lets just give GPG a dispassionate send off,there is no good reason for it's existence any more.