Guinness Peat Group plc (GPG) announces update on value realisation programme and proposed structure On 11 February 2011, the GPG Board outlined a revised strategy for the GPG Group that focused on the following key principles:
- GPG to undertake an orderly value realisation of its investment portfolio
- GPG's investment portfolio potentially reduced to the point where an investment in GPG becomes a -pure exposure to Coats
- Cash proceeds from the orderly realisation of investments to be used to pursue capital management initiatives. Decisions as to the quantum and timing of capital returns to shareholders would have regard to the GPG group's actual and contingent liabilities
Since this announcement, in addition to progressing these initiatives, the GPG Board and management have focused on reducing overhead costs and complexity within the GPG corporate structure and on supporting Coats' management in its growth and business development initiatives and good progress has been made in relation to each of these items:
- GPG recently announced the sale of its investment in ClearView Wealth Limited for A$124.3m (£80.7m) (including dividends) and can confirm that it has now realised in excess of 50% (by volume and value) of the investment portfolio it owned on 1 January 2011. A number of work streams and processes are ongoing in relation to the remaining portfolio investments and some of these are in advanced stages and are expected to complete in the current year
- A capital return of £80m in cash was made in July 2011 and in October 2011 a £12m cash dividend was paid together with the issue of £6m of shares pursuant to a scrip dividend alternative
- GPG capital notes with a principal value of NZ$77m (£39m) were purchased and cancelled on 15 March 2012. On 24 September 2012 GPG announced its intention to exercise its option to purchase the remaining capital notes with an election date of 15 November 2012 and a principal value of NZ$350m (£178m)
- A wind-down plan is being progressively implemented for GPG's corporate functions and staff numbers and overhead costs have been reduced
While completing the above work streams will continue to receive strong focus from the GPG Board and management, the GPG Board has now reviewed options to maximise shareholder value from GPG's investment in the Coats business. It has determined that this will be achieved by renaming GPG as Coats plc ("New Coats") at the point when GPG shareholders' investment is predominantly represented by the Coats business.
The combined GPG and Coats management teams, together with advisers as required, are working through a detailed timetable and transition plan. The transition is intended to be complete in the second half of 2013.
