Tower to increase Australia unit assets by A$30m

By NZPA

Tuesday 14th January 2003

Tower Ltd said today that following discussions with the Australian Securities and Investments Commission (ASIC) it would increase the surplus assets in Tower Australia by $A30 million by March 31.

A spokeswoman for ASIC said the commission had required Tower to make the disclosure. She said it was a prudential issue but would not provide further details as to why the commission had made the requirement.

Tower said that Tower Australia already had excess surplus assets over and above the level required by the Life Insurance Act.

"The decision to increase the level of surplus assets follows a requirement from Apra (the Australian Prudential Regulation Authority) that surplus assets are increased back up to the company's target surplus level quickly.

"The timetable is still under discussion with Apra. The increase is seen by the board as a prudent step to take in rebuilding confidence in its Australian business," Tower said.

Tower Ltd said it would not expect any dividend to be paid from Tower Australia unless its target surplus was met and maintained.

It said it expected to use internal sources of funds in the group to achieve the increase and did not intend to undertake an equity issue to provide funds to cover the requirement.

It also said it did not expect the increase in surplus assets to affect profit projections for the group.

Tower was the target of a mystery buyer seeking 10 percent of the company just before Christmas.

The company has been seen as a takeover target since its stock slumped around 55 percent following a profit warning in November.

It slumped even further when it announced a $75 million annual loss, of which around half was a write-down of its Australian operation, Bridges.

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