Will Gibbs retain his chairmanships of Tower and Turners & Growers?

By Jenny Ruth

Sunday 29th August 2010

With Guinness Peat Group making it clear it intends to retain its major shareholdings in Tower and Turners & Growers, it's an open question whether sacked GPG director Tony Gibbs will retain his chairmanships of both companies.

GPG owns 35% of Tower and 66% of Turners & Growers.

Tower shareholders last voted in February to re-elect Gibbs, who has been that company's chairman since December 2006. He has been chairman of Turners & Growers since 1994 - it listed in late 2004 - and was last relected in June 2008.

By all accounts, Gibbs has the support of both companies and Tower has provided him with an office since his sacking from GPG in late June.

It seems certain any attempt by GPG to oust Gibbs from Tower would be a messy affair and, even without the support of GPG, Gibbs could stand for election as an independent director.

Possibly, with institutional investors already restive about GPG's future options, GPG won't want to buy another fight over Tower's governance.

There's also the question of who GPG could appoint to replace him to represent its interests since Gibbs has always been the driving force behind both investments.

As GPG chairman Sir Ron Brierley acknowledged last week, when the New Zealand office was set up in the early 1990s, "there were no undue expectations but, largely due to Tony's efforts, it proved more active and rewarding than anticipated."

Also last week, Brierley made it clear GPG is otherwise no longer interested in investing in New Zealand, having already closed its New Zealand office and planning to sell the rest of its New Zealand portfolio. New Zealand has become "expendable for GPG," he said.

Institutional investors say any decision should be rational and based on Gibbs' performance and they can't see any grounds to remove him on that basis.

"Their (GPG's) interest would be at the strategic level. I'm not sure that there's much advantage in making major changes unless somebody thinks GPG's strategies for these companies needs to be changed," says one fund manager.

Another says his interest is whether directors can deliver adequate returns to investors. "It comes down to whether it's a personal issue or a more objective view."

GPG's remaining New Zealand portfolio consists of 1.3% of Fisher & Paykel Appliances, valued at $4.4 million at Friday's 51 cent a share closing price, 1.3% of ASB Bank's capital A preference shares, valued at $3.4 million, and 19.4% of Turners Auctions, valued at $7 million.

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