Tower to raise $81.3m via discounted rights issue

Monday 24th August 2009

Tower, the insurer and fund manager that is one-third owned by Guinness Peat Group, will raise $81.3 million through a fully underwritten rights issue.

The offer is for five new shares for every 16 held at a price of $1.34 apiece, a 26% discount to their market price on Friday. The shares dropped 3.9% to $1.74 when they resumed trading, having been halted for the announcement. The issue is underwritten by Goldman Sachs JBWere and Guinness Peat, which indirectly owns 34.9% of Tower, plans to take up its entitlement.

The funds will be used to support Tower’s “organic growth strategies and enhance the group’s financial flexibility to take advantage of strategic opportunities that may arise,” managing director Rob Flannagan said in a statement.

The equity raising adds to the $81.7 million Tower raised in March via the sale of bonds paying 8.5% annual interest. That sale was less than the $100 million Tower had been willing to sell including oversubscriptions to repay debt.

Flannagan said Tower’s fundamental’s are “sound” and in the four months through July 31, the company had see “a continuation of satisfactory results” that if sustained will allow it to post full-year underlying profit in line with expectations.

In May, Tower posted a 32% gain in first-half profit on better earnings from its general insurance arm and an accounting gain on the valuation of life risk policy liabilities.

Existing shares will be qoted ex-entitlements on the ASX on August 27 and on the NZX on September 3.

Businesswire.co.nz

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