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Tower steadies

Friday 11th July 2003

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Tower shares had firmed 7% to $1.64 by yesterday from last Friday after Guinness Peat Group (GPG) persuaded directors to accept a compromise underwriting deal that keeps the corporate raider in the box seat.

Sir Ron Brierley's vehicle will have the lead role in a 4:3 rights issue at 90c to raise $210.8 million to pay debt maturing next month.

It will boost GPG's shareholding from 9.9% to 13.75%, made possible by shareholders agreeing last Friday to lift the 10% shareholder cap.

GPG's original underwriting proposal would have given it a 30% stake and substantially reduced the cost of its overall shareholding.

GPG's manoeuvrings had angered other shareholders, including the Eric Watson-linked Hanover Group, which had submitted an alternative underwriting deal based on a pro rata basis for shareholders.

The original GPG deal gave it much more favourable terms than other shareholders.

Hanover has asked the Takeovers Panel to review the latest underwriting deal.

It is also considering whether to be part of what Tower calls a "broad panel" of sub-underwriters. Hanover has a 4.3% stake.

The New Zealand Exchange's market surveillance panel agreed to the waiver of two listing rules on condition all sub-underwriters be treated the same and that the independent directors of Tower made the agreement on an arm's length commercial basis.

GPG has two directors.

The share price jumped 9% to $1.67 on Monday after details of the new underwriting deal were revealed.

Tower shares have slumped more than 20% this year.

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