Announcement
GENERAL: TWR: MARKET ANNOUNCEMENT - TOWER PROPOSES GEOGRAPHIC SEPARATION
02:32pm
TWR
08/08/2006
GENERAL
REL: 1432 HRS Tower Limited
GENERAL: TWR: MARKET ANNOUNCEMENT - TOWER PROPOSES GEOGRAPHIC SEPARATION
MARKET ANNOUNCEMENT - TOWER PROPOSES GEOGRAPHIC SEPARATION
ANALYSTS' BRIEFING PRESENTATION
TOWER will hold a Media Briefing today at 3.00pm NZ time (1.00pm AEST) and an
Analysts Briefing at 4.00pm NZ time (2.00pm AEST) in relation to this
announcement. Both briefings will be webcast live (audiocast with
simultaneous slides)on the TOWER Limited website www.towerlimited.com and an
archive of the webcasts will be available to be accessed on demand shortly
after the briefings finish.
The announcement and the briefing presenation will also be posted on the
TOWER Limited website.
TOWER PROPOSES GEOGRAPHIC SEPARATION
TOWER Limited Chairman Keith Barton announced today that a geographic
separation of the New Zealand and Australian businesses is being recommended
by the Board.
Keith Barton said "We believe that a separation has the potential to create
future value for TOWER shareholders because it will:
1.1 Realise over time the potential underlying value of TOWER's Australian
and New Zealand businesses by enabling each to focus on its own strategies
for growth, with direct access to funding and capital markets as needed.
1.2 Enable future investors to choose whether to invest in TOWER New Zealand
or TOWER Australia, or both based on the investment characteristics that best
meet their own objectives.
1.3 Simplify the structure of both TOWER's Australian and New Zealand
businesses making it easier to evaluate their performance and potential,
resulting in a more accurate valuation of the true worth of each business
Subject to shareholder approval, it is envisaged that separation will be by
way of a demerger of the Australian business with a transfer of ordinary
shares in the listed Australian business to existing TOWER shareholders and a
consequent capital reduction in TOWER Limited, with the cancellation of an
equivalent value of TOWER Limited shares held by existing shareholders. It is
intended that the Australian company be listed on the ASX.
In conjunction with this separation it is proposed that there will be a
capital raising of between A$150-180m via a renounceable rights issue.
Capital raised by TOWER Australia will be used to facilitate refinancing and
reshaping of the existing group debt structures.
Guinness Peat Group, TOWER's largest shareholder, supports the separation
proposal and will underwrite the proposed renounceable rights issue. As with
the separation proposal, this will also be subject to shareholder approval.
If the proposal proceeds, immediately following the separation, TOWER Limited
shareholders will:
- continue to hold shares in TOWER Limited (the TOWER New Zealand business
group),
- be issued with shares in the Australian business group to be called TOWER
Australia Group Limited, and
- be issued renounceable rights to subscribe for additional shares in the
Australian group.
TOWER Group Managing Director Jim Minto said "This proposal will allow the
Boards and management to focus on their respective operations and I believe
will over time lead to better performance of each entity. I do not believe
that the separation process will impact adversely on clients, business
partners or business arrangements in either New Zealand or Australia. The
outcome will be a further strengthening and focussing of TOWER through two
separately listed businesses which will benefit not only shareholders but
also our clients and business partners."
Mr Minto said "Our TOWER NZ and Australian business are very different in
their characteristics and business operations. They don't depend on one
another operationally or gain natural synergies from working together. TOWER
successfully operated as a purely NZ business for over 100 years from 1869 to
1990 and it will enter a new period as a focussed NZ business. The Australian
company will focus its efforts on being Australian market leader as a pure
Life risk provider with a niche investment business".
TOWER Group Managing Director Jim Minto will under the proposal become Chief
Executive Officer of TOWER Australia Group Limited with John de Zwart current
Group Chief Financial Officer taking the Chief Financial Officer role of the
listed Australian Company. A Chief Executive Officer appointment for the
overall New Zealand business is in the process of being finalised. Existing
business line Chief Executive Officer positions will be unaffected.
From the separation the Chairman of TOWER NZ Limited will be Tony Gibbs an
existing TOWER Limited Director and the Chairman of TOWER Australia Group Ltd
will be Keith Barton the existing TOWER Limited Chairman.
The proposed timing of the demerger is as follows:
- Scheme book sent to shareholders mid October
- Shareholders vote on Scheme November
- Implementation of demerger November
- Renounceable rights issue December
TOWER expects to lodge the Scheme documents with the regulatory bodies in
late September 2006 and accordingly will be in a position to provide further
details regarding the proposal at that time.
Under the proposal, TOWER is considering making offers of securities referred
to in this announcement. No money is currently being sought and applications
will not be accepted nor money received until shareholders have received a
Prospectus/Investment Statement.
Caliburn Partnership is advising TOWER.
For more information Jim Minto
Group Managing Director
Ph 0064 9 369 2274
End CA:00135103 For:TWR Type:GENERAL Time:2006-08-08:14:32:07
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