Sharechat Logo

Daily ShareChat: GPG

By Jenny Ruth

Sunday 27th June 2010

Text too small?
 Jenny Ruth

Guinness Peat Group's proposed restructuring plan, which would see the Australian assets spun out into a new company, will not "return value" to shareholders in the sense of a cheque in the mail, says ASB Securities analyst Florian Burch.

"Instead, shareholders will continue to own the same assets which will be administered by more or less the same managers but in separate structures, each with its own set of overhead costs (board, administration etc)," Burch says.

While this may make the businesses more transparent and improved governance, both could be achieved under the existing structure, he says.

If the restructure proceeds, the shares are likely to trade at an even deeper discount to net asset value (NAV).

"We accept the current market conditions and the state of many of GPG's assets do not appear ideal for selling assets, especially under-performing ones bought for a higher price than the market is currently prepared to pay," Burch says.

"Given the 52% discount (with the shares trading at 64 cents) of GPG's shares to our estimate of their NAV, however, shareholders might be better off if the company sold what assets it could - including Coats and the listed Australian shares - and either bought back GPG shares, paid out the cash or set out a method and timetable for doing so."

Investment rating: Outperform.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

GPG still wrangling UK pension liability, Coats 1H earnings more than doubles
Guinness Peat completes $1.4 billion in asset sales, turns focus to Coats
Guinness Peat exits last asset outside Coats, sells Tower stake for $118 mln
GPG focuses on cost cutting as restructuring plan is delayed by UK pensions regulator
GPG names new non-executive chairman of Coats
GPG says UK regulator extends investigation into its pension schemes
GPG pension headache puts brake on wind-down plan
GPG sells stake in ASX-listed Ridley Corp for A$54 mln in cash
GPG to reap 92 mln pounds from latest round of asset sales
GPG thrown curved ball as UK regulator looks at Coats pension plan