COA - Coats Group plc (formerly GPG - Guinness Peat Group Plc)

[Gryffyn]

GPG (through its nominee Ithaca (Custodians) Limited
and through Guinness Peat Group Shares Limited) has
a 19.91% shareholding in TOWER. If the Proposal is
implemented, GPG will have the same shareholding in
AWM, and will exercise all Entitlements allocated to it in
full to maintain that shareholding.
The offer of AWM Shares under the Entitlements Offer is
underwritten by GPG for the full amount.
AWM Shares not subscribed for under the Entitlements
Offer in accordance with the terms of this document
will be subscribed for by GPG. The main terms of
the Underwriting Agreement are summarised in this
section. If the Underwriting Agreement does not
become unconditional, it may be terminated and,
in that case, TOWER and AWM will not proceed with
the Entitlements Offer.
Any AWM Shares for which GPG subscribes under
the Underwriting Agreement will increase GPG’s
shareholding over 19.91%. If no Entitlements were
exercised by Shareholders other than GPG, GPG would
hold approximately 66% of AWM Shares following
completion of the Entitlements Offer (approximately
186.5 million AWM Shares out of a total of 282.6
million AWM Shares). GPG is entitled to retain those
Shares. Accordingly GPG may signifi cantly increase
its voting power in AWM through the Underwriting
Agreement.

[Gryffyn]

More good news for GPG...

GPG will subscribe (or procure subscription) at the issue
price of A$0.80 per AWM Share for all AWM Shares not
subscribed for under the Entitlements Offer.
If the Underwriting Agreement proceeds, AWM must
pay GPG an underwriting fee of A$2,276,400 being
1.75% of the total number of AWM Shares to be issued
under the Entitlements Offer multiplied by the issue
price of A$0.80 (Underwriting Fee).
If the Underwriting Agreement is terminated because:
• through no fault of AWM or TOWER any
condition is not met (including Shareholder
approval to either the Proposal or the
underwrite), AWM must pay a fee of
A$220,000 to GPG;
• of a breach of any obligation of AWM
(including relating to the contents of
this document), AWM must pay a fee of
A$500,000 to GPG; or
• AWM elects not to proceed with the
Entitlements Offer (other than because of
the default of GPG), AWM must pay a fee of
A$750,000 to GPG. In addition GPG has the
fi rst right to underwrite any other offer
of securities by AWM for the following
12 months.
AWM has agreed to indemnify GPG and persons acting
for them in connection with the underwrite against
losses relating to breach by AWM of its obligations
under the Underwriting Agreement.
AWM will reimburse GPG for all reasonable out of
pocket expenses, legal expenses and third party
disbursements properly incurred by GPG in connection
with the Entitlements Offer, to a maximum of
A$300,000. All payments for the underwriting fee and
expenses are plus GST.

[Gryffyn]

GPG - Gauging Guinness Peat Group

Share Price $1.960 *
Market Cap $1700 million
12 Month Range $1.43 - $2.06
Fundamental Risk 2.0
Share Price Risk 3.5
Share Price Comment Hold for the Upside
* Share Price correct as at 29-Nov-2004
This is a stock we'd love to own at the right price. But should we buy now or keep waiting?

Unusual as it may seem, we're going to start this review of a brand new stock by referring back to an article on technology company Solution 6 from 18 months ago. Our Speculative Buy recommendation on that stock, in issue 125/Apr 03 (Speculative Buy-$0.43), was out of character for technophobes like us. While we did label it a High Stakes play, we also happily declared that we have no talent in the field of software development and so found the business nearly impossible to value. So what right did we have recommending it?
It's a technique known as following the smart money. If you can't identify people smarter than yourself, it's probably time to take a long, hard look in the mirror. High up on our long list of smarter folk come kiwi duo Sir Ron Brierley and Gary Weiss. Their investment vehicle, Guinness Peat Group (GPG), had amassed an 11% stake in Solution 6 and GPG man Michael Jefferies had been given a seat on the board. Subscribers who followed that recommendation and sold out seven months later, as we suggested, made a profit of almost 50%. But, in a mild sting to our pride, a few days later MYOB announced its plans to acquire the group and GPG has done substantially better.
Solution 6 was a typical GPG investment-downtrodden, misunderstood by most and, so it proved, very cheap. GPG typically buys shares at knock-down prices when others are unable to see the true value. It then either agitates for management change or encourages potential acquirers to take a look, sometimes with the blessing of management but often without. Either way, GPG's record of extracting value from acquisitions is very impressive.Brierley and Weiss are two of the few corporate raiders of the 1980s to have escaped gaol and the poorhouse, although they came close to the latter. At the helm of Brierley Investments and IEL, the pair's raids on AGL and Woolworths in the decade of decadence were the stuff of financial legend (for those who care to read about those escapades, try a copy of Masters of the Market).
In the early 1990s the lads parted ways with Brierley Investments and bought into GPG, once part of a traditional London merchant bank. That's been their investment vehicle ever since. After learning a very big lesson in the dangers of debt (see this issue's cover story), GPG has traded with very little net debt. Its investments, such as Tyndall Australia in the early nineties, have proved every bit as successful as their earlier, debt-fuelled adventures. GPG is an investment company, although structured a lot differently to your average listed investment company (LIC). It tends to own much larger stakes in companies so it can exert influence over their boards, and even has some wholly-owned businesses.
The company is based in London with stockmarket listings in the UK, Australia and New Zealand. With significant investments in all three countries, valuing GPG isn't easy. There's a significant currency exposure and different tax and accounting laws muddle the numbers further. And the annual one-for-10 stock dividend, which has no economic impact other than to make comparisons rather complicated, clouds things even further.But that hasn't stopped the group from compounding net assets per share at almost 20% a year since the early nineties. GPG's portfolio of investments is currently valued at around 670m pounds, including 150m pounds in cash. The largest investment, comprising one-third of assets, is the newly-acquired, wholly-owned subsidiary Coats plc. The UK company is the world's largest supplier of industrial sewing thread and craft products. Other large majority-owned investments include New Zealand produce marketer, Turners & Growers, and ACT property developer, Canberra Investment Corp

[Gryffyn]

Above originally posted by airedale on TWR thread.

[coge]

Thanks, Gryff.

A bit of light reading for Saturday morning.[8D]

[nelehdine]

Yawn Yawn ... someone wake me up when this stock starts moving ......

Disc: bored GPG holder ...

[Paddie]

Nele,

You puzzle me. You have been holder for such a short time.

Paddie[]

[nelehdine]

Two months of going sideways/drifting lower Paddie, all my other stocks have performed well, GPG seem a little "blinded by the headlights" at the moment. ( Only 2% of portfolio, so no major issue )

[Gryffyn]

Brokers spy value hidden in Coats

11.01.05
by Ellen Read


Brokers who chose Guinness Peat Group as one of this year's top picks on the sharemarket have three main reasons for championing Sir Ron Brierley's investment company.

ASB Securities believes the market has yet to fully appreciate the company's asset base and the huge value potential in Coats, the zip-and-thread maker.

The English firm, boasting 30,000 employees, was taken over by GPG last April with a £200 million ($539 million) investment.

Another GPG champion, First NZ Capital, sees the successful restructuring of Coats - which accounts for 35 per cent of GPG net assets - as having the potential to add at least 45c a share to GPG's net asset value.

First NZ Capital research head Rob Bode said that Coats, headed locally by director Tony Gibbs, was also a potential beneficiary of the expected fall of the local dollar this year.

This was because companies that held most of their investments overseas, such as GPG, experienced a rise in the value of their assets when the New Zealand dollar fell.

The third GPG fan among the nine broking firms that took part in this year's Business Herald stock-picking competition is GoldmanSachs JB Were.

The firm's head of retail, John Cobb, said GPG was given the nod due to the signs of operational improvements at Coats and the potential for corporate activity surrounding Rubicon and Tower, both of which feature heavily in GPG's New Zealand investment portfolio.



GPG, which became the investment vehicle of Sir Ron after Brierley Investments floundered in the 1990s, has a market capitalisation of just over $1.9 billion.

The company's investment track record spans sectors including financial services, motor vehicle distribution, foodstuffs, building products and gas distribution.

In August, the company disclosed a "modest £5 million result in conventional accounting terms" for the six months to June 30, saying it had been another active and productive half-year.

"As we have stated before, many of GPG's major sources of profit do not fall neatly into six- or 12-month reporting periods and some volatility must be accepted," said director Blake Nixon.

"For the same reason, the half-year is not necessarily indicative of the full-year result, when various transactions now under discussion or negotiation are likely to come to fruition."

Three reasons to like GPG

* The potential of its British thread-making business, Coats.
* An expected dip in the dollar.
* The likely corporate activity around GPG's local investments.

[coge]

Not sure I agree with the dip in the dollar, but there has been good volume lately.

Could be on the way to breach 2.30 soon.

[Gryffyn]

Does anyone know if GPG plan to exercise all their rights?

[Taijon]

More than 19 million shares sold in the first hour today and the share price has dropped 3 cents.

Gryffyn, is this you disposing of your GPG shares today following your sell down of TWR shares yesterday?

[Cooper]

DJ MARKET TALK: GPG Down After Discount Stake Sold Overnight



1008 [Dow Jones] Guinness Peat Group (GPG.NZ) stock price may come under pressure today
after big overnight trade goes through at discount to market; line of 19 million shares,
or 2.2% stake, traded at NZ$2.12. GPG soared to all-time high of NZ$2.27 last week,
closed yesterday at NZ$2.22; stock opens weaker in early trade, now down 1.4% at NZ$2.19.

(POR)

No mention of seller or buyer.

[Gryffyn]

:-) Taijon. I'd be happy to pick some more up at 2.12.

[Gryffyn]

ps - that's not saying I bought the 19mill. I have a few but not that many!