Tower separation a step closer

Jim Minto

The separation of Tower’s Australian and New Zealand operations is officially another step closer after the company’s bondholders approved an early repurchase of capital bonds worth NZ$125 million.

The decision will allow Tower Finance to repurchase and/or redeem the capital bonds for cash if required.

Tower managing director Jim Minto said: “The successful bondholder vote will allow the post separation, solely New Zealand and Pacific asset-based Tower business to have a lower gearing ratio and reduced finance costs.

“The separation proposal, which will be voted on in November, was not dependent on the bondholder decision — it is however one of the elements that make it attractive.”

Under the proposed de-merger, existing shareholders will receive shares in both operations, with the split likely to be around 65 per cent for the Australian arm and 35 per cent for the New Zealand business.

Minto said the separation process was proceeding smoothly and expects a Scheme of Arrangement document to be sent to shareholders in October, in time for a special general meeting of shareholders to be held in Wellington, New Zealand, in early November.

Depending on an affirmative separation vote at that meeting, the bonds repurchase will be implemented in December, at a 2 per cent premium to the bond face value along with interest to date of repayment.

Tower Finance also has on issue NZ$75 million in capital notes to be redeemed at the same time.