Tower members planning to sell their shares could find there's less money in it than earlier expected.
Details of Tower's $350 million public share offer were announced earlier this afternoon (Tuesday) and the indicative issue price range is $5.80 to $6.80. That's down from earlier estimates of $6 to $8 a share sent to the 400,000 members before voting on demutualisation.
This decline was put down by Keith Taylor, Tower's Group Chief Financial Officer, to "softer market certainty", as the life company sector has eased back 15 per cent since earlier in the year.
Members will know what their shares are worth - and everyone else what they have to pay - on September 27 before the company starts conditional trading the following day.
Group Managing Director James Boonzaier, announcing details of the transtasman offer, said that how much institutions would take was not yet finalised and what would be left for private investors would "all depend on demand".
Boonzaier said indications so far were that the vast majority of Tower's members would keep their holdings and there was already quite a strong interest from them in taking up further shares. He said members were expected to end up with around 55 per cent of the new company.
The public offer runs August 30 to September 17 and at least $350 million worth of new equity is up for grabs. Added to that are any shares members sell through a free share sale facility, plus up to 9.5 million shares that can be issued if the offer is oversubscribed.
Tower parent company members are getting 53.1 million shares doled out to them, while subsidiary company members receive entitlements to 42.7 million partly-paids. They, along with Tower customers and employees, will get preference to additional shares through the public offer if it's oversubscribed. There's also another bite out of the $350 million by way of a firm allocation ($75 million) for clients of the half dozen NZSE and ASX members associated with the offer.
Boonzaier said the prospective PE for the new company was 13.4, "perhaps a little more conservative than the sorts of PEs in the insurance sector". The current range was given as 13.5 to 17.
Tower is also planning $465 million in debt-raising, although $240 million of that is to refinance the recent purchase of FAI Life.
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