Forum Archive Index - June 2003

["Shayne King" <shayne_king1@hotmail.com>]

Another question to ponder: why is it that over the past two weeks it has 
been constantly stated that under the proposed deal, GPG will gain 35% of 
TWR therefore giving it "control"??? According to the New Zealand Accounting 
Standards, SSAP-8 3.6, control is defined as:

"the power to govern the financial and operating policies of another entity 
for the purpose of obtaining the benefits and/or assuming the risks normally 
associated with ownership"

SSAP-8 4.5, also go's on and talks about that control is when the investor 
assumes the rights to 50% or more of earnings, dividends and net assests. 
However, GPG is not acquiring this amount and will not have access to these 
levels of return. What GPG will have however is also defined in SSAP-8 3.14 
as being significant control:

"the capacity of an investor to influence the financial and operating 
policies of an investee".

There is a huge difference between these two definitions. I wonder if the 
media is aware that the information they are giving out to the market is 
incorrect when talking about "control".
An investor is deemed to have significant influence over an associate when 
they have 20%-50% of the company. GPG will therefore have the ability to 
"influence" decisions regarding dividends, representation on the board of 
directors, inter-entity transactions etc (SSAP-8 4.10).

As for all this speculation around the "alternatives" being put together by 
Hanover and First NZ securities, i think Tony Gibbs said it best......"put 
up or shut up". Way to go Tony!!!

Regards
Shayne

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