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Members give Tower the green light

Tower Corporation members give a resounding thumbs-up to demutualisation plans.

Monday, May 10th 1999, 12:00AM

by Philip Macalister

Tower Corporation members have given the big tick to demutualisation and listing, with a massive 98.9 per cent of votes in favour of the proposal.
Managing director James Boonzaier confessed after Monday's members' meetings in Wellington that he wasn't expecting such strong support: "We were hopeful that it would be well into the 90s...but this is the highest vote for any demutualisation (AMP was 98.3 per cent)".
"It's taken two years of quite hard work to get to this point, and it certainly endorses the fairness of this scheme."
Suppport for the proposal was slightly stronger from members in the parent company (99.5 per cent) than in the subsidiaries (98.7 per cent). Some members raised objections to the allocation formula used for share entitlement, but this was roundly defended by chairman Colin Beyer, Boonzaier and Tower's chief actuary Darryl Hayes as being fair and equitable.
Tower now has to pull out all the stops to achieve demutualisation and listing by its target date of early October. It hopes to have a prospectus ready in July.
One blot still on the horizon is GPG's Privy Council hearing, now set down for June 10. Boonzaier said the two points to be considered were whether Tower's scheme was fair - "members have now answered a resounding yes to that" - and whether it was entitled to hand out the partly paid shares (to subsidiaries).
He remains confident this will be tossed out, saying GPG's continued challenges might well have antagonised some members and increased support for the proposal.
Boonzaier said the market capitalisation of the newly formed company was likely to exceed $1 billion, with an estimated initial value of between $1.3 billion and $1.45 billion including FAI Life. He was not sure what size the public pool would be - if any - "it comes down to the level of demand".
As well as the 53 million fully paid shares for parent company members and the entitlement to 43 million partly paid shares for subsidiary company members, there will also be a preferential offer to members and clients of the company. A 10 per cent shareholding restriction will remain in place for four years.
In his address to members, Boonzaier said the new company hoped to expand services in superannuation, trustee services and funds management and would look at business opportunities in both Australia and Asia. He said later that Tower was currently "actively pursuing" some business acquisitions in Australasia.
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