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Hanover puts heat on Tower

By Duncan Bridgeman

Friday 18th July 2003

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Frustrated Tower shareholder Hanover Group is pushing for a seat on the troubled insurer's board despite major differences with rival investor Guinness Peat Group.

"We know Tower is looking for a couple of extra directors and we want to be a little closer to that process," Hanover chief executive Kerry Finnigan said yesterday.

"We are still genuinely concerned about the influence that we believe GPG has over the Tower board."

Hanover and GPG fought a battle to underwrite a $210 million recapitalisation rights issue for Tower, leaving neither party entirely happy with the outcome.

This week the Takeovers Panel granted an exemption for GPG to underwrite a last-minute proposal that would cap its Tower shareholding at 13.75%.

GPG, with a 9.9% Tower shareholding, was earlier shunted off a proposal that could have seen the corporate raider lift its stake to 56%.

Hanover is not automatically entitled to a seat at Tower's board despite this week increasing its shareholding to 6.3% and it faces an uphill battle with GPG having two Tower directors in Tony Gibbs and Gary Weiss.

Market sources said Hanover might look to increase its Tower shareholding further to 10% to involve itself in any future takeover or sale activity.

The Eric Watson and Mark Hotchin-owned group could argue that its experience in the financial services sector would give it entitlement to a directorship in Tower.

"The issue for Tower with regard to Hanover is whether it is better to have an argumentative and obstreperous shareholder outside the tent or whether to bring them inside," one analyst said.

Mr Finnigan would not comment on how Hanover would present its case for a seat on the Tower board or whether the group intended to increase its shareholding.

"I think where we are at right now is that we want to understand this business a lot more than we currently do at the moment.

"We are a lot happier with the end outcome than we would have been if the original proposal had gone forward so we can't complain in that regard."

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