Forum Archive Index - June 2003

[Robin Benson <rob@hammerheadmedia.co.uk>]

Yes it seems the term "control" has been bandied about quite a bit 
recently, no doubt in some cases with an agenda. I'd say "significant 
influence" is right in this case ... GPG has two directors on the TWR 
board. The registry is also very fragmented, with 40% of shareholders 
owning fewer than 5000 shares, the majority of which own fewer than 
1000 shares.

In terms of "alternatives", you can be sure that Hanover et al will be 
scheming for as good a deal as GPG -- of course, they care as little 
about anybody else as GPG does (not much, if at all). That said, if one 
were a TWR shareholder, it would be foolish to accept a single 
take-it-or-leave-it offer without  considering all options!

Regards

Robin

disc: hold GPG

On Saturday, Jun 21, 2003, at 07:22 Europe/London, Shayne King wrote:

> 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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