Daily ShareChat: GPG

By Jenny Ruth

Wednesday 29th September 2010

The appointment of four new independent directors to Guinness Peat Group's board is a positive step which provides assurance that shareholder interests are a priority, says Greg Main, an analyst at First NZ Capital.

"This is in response to institutional feedback post GPG's proposed restructure and a perception the lack of independent directors presented a potential conflict of interest," Main says.

A sub-committee of the four new directors, who now form the majority on the board, will now review restructuring options.

"The original expectation that shareholder documentation would be distributed in October regarding the proposed restructure is likely to have been superseded as the new committee has to review all the options and get up to speed on some complex issues," Main says. No timeline was given as to when shareholders can expect an update.

"While normally a proposal to restructure and return value should equate to closing any valuation discount, uncertainty over potential liabilities, potential tax implications and the form of any restructure make assessing the value GPG shareholders may ultimately derive difficult."

Value will depend on the decision about which "strategic option" best delivers value, Main says.

He estimates GPG's shares have a net asset value of 94 cents but has a 75 cents target price.

Recommendation: Neutral.

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