Friday 11th February 2011
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Guinness Peat Group is planning an initial capital return to shareholders of at least Stg75 million (NZ$166.7 million) in the 2011 calendar year, as it starts an orderly sell down of its assets.
In a "strategy to realise value" published today, the company said the capital return would be subject to shareholder, tax and other approvals.
Further details would be provided once the form, final amount and process of the capital return had been determined.
As part of the orderly value realisation, its investment portfolio may be reduced to the point where an investment in GPG became a pure exposure to textile business Coats, Sir Ron Brierley's investment company said.
Its investment portfolio, excluding Coats, had a market value of about Stg610m as at September 30, with investments in listed and unlisted businesses in this country, Australia and Britain.
"An orderly value realisation will be pursued over time with the aim of exiting GPG's entire portfolio of investments and, in the process, generating cash proceeds that can be used for capital management initiatives.
"GPG will seek to exit individual investments in an appropriate investment timeframe for each investment which optimises value for GPG shareholders," the company said.
It would not make new investments, but would contribute capital to existing investments if that was viewed as value enhancing.
The decision to sell down assets was made after a recommendation from a sub-committee of non-executive directors.
Issues identified by the sub-committee included a disappointing performance in recent years, and the existence of some actual and contingent liabilities, including capital notes, pension liabilities and potential payment of a European Commission fine.
The sub-committee noted a lack of value transparency with some investments being unlisted, the largest of which was Coats, while GPG's portfolio was large, complex and geographically diverse, and included a mix of minority shareholdings and wholly-owned businesses.
GPG said it would continue to evaluate alternatives for realising value from Coats, and as Coats' plans for profitable growth were achieved there would be greater opportunities for value optimisation.
Coats had been adversely affected by the global downturn in 2008 and 2009, but the business had since improved and the benefits of extensive restructuring had begun to materialise.
GPG was in a strong financial position with shareholders' funds of more than Stg930m, and more than Stg170m in cash as at September 30, GPG said.
The size and timing of capital return to shareholders would depend on when value was realised from GPG's investments and would need to have regard to the GPG group's actual and contingent liabilities.
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