Chairman goes as Tower considers offers
Bill Falconer has stepped down as Tower’s chairman as the listed insurer and fund manager mulls its options for restructuring the business to add value for investors.
Thursday, September 13th 2012, 2:36PM 5 Comments
by Niko Kloeten
Tower said today it was “considering a number of proposals with interested parties” after completing a strategic review supported by investment bank Goldman Sachs.
Falconer, whose current term expires next February, has decided to step down now to “enable a new chairman to implement the initiatives emanating from the strategic review,” the company said.
Independent board member Steve Smith has been appointed as interim chairman
Managing director Rob Flannagan said it was the board’s view that Tower’s strength was not reflected in the market price for its shares (last traded at $1.85) at a time when the company had “achieved strong financial results” and had “strengthened operational efficiency”.
He said Tower had outperformed the New Zealand market since its separation from Tower Australia, but it was the board’s view that more shareholder value could be created.
“To this end the Board is open to changing Tower’s business structure to improve the value achieved for shareholders and is considering proposals including operational alliances and divestment of assets.
“At this point, there is no expected outcome from the exercise, and any such transactions would need to make sound business sense before being progressed”, he said.
Flannagan said it was important Tower’s policy holders were unaffected by any change and could continue to rely on the cover they have contracted with Tower.
Announcements about the propositions being investigated would be made if they represented realistic options for the company, he said.
“It’s in the best interests of shareholders to consider some of the proposals that have been put on the table. All proposals are being tested against Tower’s overriding objective which is to create value for shareholders.”
The announcement follows recent comments by 34% shareholder Guiness Peat Group (GPG) that Tower’s stock price didn’t reflect the value of the business.
Niko Kloeten can be contacted at firstname.lastname@example.org
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