Coats to quit NZX and ASX as Antipodean shareholdings dwindle

Wednesday 18th November 2015

Coats Group, the UK based threadmaker that grew out of diversified investor Guinness Peat Group, plans to quit the ASX and NZX with Australasian investors making up less than a fifth of its ownership in a bid to cut down on the costs of multiple listings.

The London based company wants to de-list from the ASX and NZX in June next year, leaving its sole listing on the London Stock Exchange, it said in a statement. The move will be voted on at its annual meeting in May next year, and needs 50 percent approval to go ahead. Australian and New Zealand investors account for 14 percent and 5 percent of Coats' stock, down from 46 percent and 9 percent two years ago.

"We are now a UK headquartered, global industrial manufacturing business, having moved away from our New Zealand investment past," chairman Mike Clasper said. "These changes have contributed to a significant shift in our shareholder register, with more than 65 percent of shareholders now UK based and less than 20 percent in New Zealand and Australia."

Former GPG boss Ron Brierley quit the Coats board in April this year after narrowly holding on to his seat in 2012, and has been selling down his shares in the threadmaker in recent years after ceding control of the investment company in 2011 when shareholders blocked a plan to split it up along regional lines.

GPG liquidated its portfolio and rebranded as Coats, though the company is still sitting on a cash fund earmarked for a capital return due to a dispute over its UK pensions scheme obligations with the British regulator. As at June 30, the company held US$679.8 million.

Separately, Coats said sales fell 6 percent in the three months ended Oct. 31 due to a stronger US dollar, and were up 3 percent when stripping out the exchange rate effects.

"Management continues to expect to deliver a year on year improvement in group pre-exceptional operating profit," it said. "Adjusted EPS (earnings per share) growth is expected to exceed operating profit growth due to year on year improvements in the underlying tax rate and lower interest charges on borrowings, however, as previously indicated, non-operating charges such as discontinued items related to the sale of EMEA crafts in July will materially impact full year reported EPS."

On the pension schemes, Coats said it had reached an agreement with the trustee for its Brunel scheme, implementing a deficit recovery plan for 5.5 million British pounds a year for 10 years, while valuations on the Stavely and Coats schemes are ongoing. Its position on the UK Pension Regulator's investigation into the schemes, including timing, remains unchanged, Coats said.

Coats shares last traded at 65 cents on the NZX, and have gained 44 percent this year.

BusinessDesk.co.nz

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