New GPG directors a watershed for company: NZSA

By Jenny Ruth

Wednesday 22nd September 2010

The appointment of four new independent directors to Guinness Peat Group's board is "truly a watershed event," says New Zealand Shareholders Association chairman John Hawkins.

With existing director Ron Langley resigning, the new directors will form a majority and will also make up the sub-committee tasked with evaluating GPG's restructuring options.

They will "overcome the old-style executive director self-interest thing" and put proper governance structures in place, Hawkins says.

The institutional investors, who, with Hawkins, were instrumental in persuading GPG to appoint the new directors, are also welcoming the move.

"It's a vast improvement," says Mark Brown at ING New Zealand. While the process - announced in late June - was taking so long some observers wondered whether it would happen, "I don't think the New Zealand institutions were in a mood to let it blow up," Brown says.

"There was such a concerted effort to see a better outcome for shareholders." Brown says he's pleased it was a negotiated outcome rather than it developing into an antagonistic situation.

Paul Richardson at BT Funds Management also rates it as "a pretty good outcome. It's pretty much what we were pushing for, us and other institutions. Now the hard work starts."

Analysts also welcomed the announcement. Guy Hallwright at Forsyth Barr says he was surprised that three of the new directors are New Zealanders.

They are Mike Allen, a director of a number of companies including Tainui Group and NZ Windfarms and chairman of PGG Wrightson Finance, Rob Campbell, an ACC director and chairman of its investment committee, and former Bankers Trust New Zealand chief executive Gavin Walker who is currently a director of the Guardians of New Zealand Superannuation Fund, ASB Bank and other companies.

The fourth director is former Macquarie Bank deputy chairman Mark Johnson who is a director of a number of Australian listed companies and chairman of AGL Energy.

They join chairman Sir Ron Brierley, Australia-based Gary Weiss and British-based Blake Nixon.

"I would think this would give the market some confidence," Hallwright says.

Another analyst says the institutions "have certainly won the arm-wrestle here."

GPG's share price reacted cautiously, rising 2 cents to 68 cents in morning trading compared with its year low at 61 cents earlier this month.

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