By Duncan Bridgeman
Friday 4th July 2003
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Institutions are expected to want the restriction lifted now that GPG has effectively been shut out of underwriting an alternative $210 million rights issue.
They are relishing the prospect of the corporate raider lifting its 9.9% shareholding through buying shares on the market rather than through a placement or underwritten deal.
GPG director Tony Gibbs yesterday would not comment on what his intentions were if Tower shareholders vote to remove the cap. "I'm not going to tell you that."
But market sources say if GPG is serious about getting a bigger chunk of Tower, it will probably have to buy shares on the market.
"The institutions like that idea ... the only issue is how many small shareholders have already sent their proxy forms in."
Some shareholders may have nominated to vote with Tower chairman Olaf O'Duill, who is in favour of lifting the 10% cap, which was included as part of Tower's constitution upon listing.
Mr Gibbs would not comment on the rejection of GPG's original capitalisation plan or the spurned alternative underwriting proposal.
Tower must seek shareholder approval for GPG to underwrite the alternative capital raising plan, after the New Zealand Exchange (NZX) rejected the company's application for a waiver to a listing rule.
It is understood GPG is appealing that decision.
In another twist, the Eric Watson and Mark Hotchin-owned Hanover Group has written to the Tower board requesting today's special meeting be cancelled if the pre-emptive right of GPG is not effective.
The Tower board has accepted a second proposal put together by three major shareholders and First NZ Capital after investors expressed concern the original plan was too favourable to GPG.
The new plan is to raise the capital through a pro-rata, four-for-three rights issue at 90c a share.
The three shareholders, including institutional investors Axa Asia Pacific and AMP plus the Hanover Group, rallied the new plan through under a tight time table.
Tower urgently needs cash to shore up its financial position and repay some of its $428 million debt, of which at least $100 million is due in early August.
Hanover chief executive Kerry Finnigan expressed concern that Tower applied for a waiver from NZX to allow GPG to underwrite the rebel proposal.
"They have got an offer on the table right now that doesn't require a waiver or shareholder approval. It is despicable behaviour really in terms of why the board of Tower supported that type of manoeuvring."
It is understood Hanover has written to the Exchange's Market Surveillance Panel outlining its objections to the waiver application. Hanover argues any waiver granted to Tower in respect of an underwriting proposal by GPG would contravene a level playing field between all Tower shareholders.
Mr Finnigan said he wanted the shareholding cap to remain in place.
"We need the cap to stay there and come off in September, and if they want to increase their shareholding to gain significant control, let them do that. But they will pay a premium, not the one that they have been trying to orchestrate.
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