GPG plans reverse takeover of UK's Brunel

By NZPA

Thursday 17th October 2002

Sir Ron Brierley's Guinness Peat Group (GPG) said today it planned a reverse takeover of Britain's Brunel Holdings Plc.

An exchange of shares whereby Brunel will effectively become the "new" GPG was considered the most effective way of implementing the merger, GPG said.

Under the proposal, each GPG shareholder will receive one new Brunel share for each GPG share, leaving GPG shareholders with 98.6 percent of Brunel.

The rest would be held by existing Brunel shareholders and the DLG Group to satisfy a Stg1.5 million ($NZ5 million) loan.

"The merger will enable the shareholders of both companies to obtain the enhanced value of GPG's ongoing activities being conducted through Brunel's existing tax and administrative structure," GPG said in a statement.

The merger is part of a reorganisation of Brunel, which bills itself as the world's second largest tobacco processing equipment company.

The merger involved a separation of Brunel from the Legg Group.

Sir Ron, chairman of GPG, said the implications of the merger were expected to be negligible in the short term "but the longer term benefits could be considerable".

Brunel announced a preliminary profit before exceptionals and tax of Stg5.9 million for the June year, compared with Stg1.3 million a year earlier.

GPG said it had been looking for a tax efficient and flexible structure and that for a number of years, the directors of Brunel had to deal with historic issues of profitability and debt.

Brunel had carried out a series of sales which had resulted in the existing group comprising of two main trading companies, but it still had large losses and a number of assets and liabilities such as mineral rights and property leases which had no relevance to its main operations.

"The directors of GPG, after having considered a number of alternatives, strongly believe that this is the most suitable course to provide GPG with an appropriate tax and administrative base in the UK."

The move would be subject to a shareholders meeting in mid-November and court approval, but hopes were that the new company would be under way by mid-December.

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