GPG shareholders to see cash once Coats is standing on its own
Guinness Peat Group's shareholders will see a cash return once the investment firm has been rebranded into its biggest asset Coats and the UK threadmaker is standing on its own two feet.
The London-headquartered company is firmly focused on getting rid of its last five assets and dealing with its UK pensions facing a shortfall in funding as it moves ultimately to leave Coats as a standalone company. GPG sees the rebranding as likely to happen in the second half of this year.
"Our focus in the year ahead will remain on ensuring that Coats is in the best possible position for its life as a stand-alone company," chairman Rob Campbell told BusinessDesk in an emailed statement.
"We will also look to return to GPG shareholders the maximum amount of excess cash once Coats has the resources it needs to achieve its strategic objectives and to optimise its capital markets positioning."
GPG's remaining assets were valued at £216 million as at February 22, and it expects to have to put aside £124 million to cover any shortfall in the pension plans it supports. The firm held £275 million in cash as at February 22, having reaped £495 million from asset sales since embarking on liquidating its portfolio in 2011.
Excluding Coats, GPG's portfolio is now made up of New Zealand insurer Tower, agri-products producer Ridley Corp, property developer CIC Australia, agri-investor PrimeAg and agri-business Tandou.
GPG returned £25 million to shareholders through its share buy-back programme in 2012 adding to the £80 million capital return and £12 million dividend in 2011. Shareholder funds were valued at £434 million as at December 31.
The shares slipped 0.8 percent to 58.5 cents in trading yesterday and are rated an average 'outperform' based on six analyst recommendations compiled by Retuers. The analyst have a median target price of 66.5 cents.
Coats made a net loss of $US113 million attributable to GPG on sales of $US1.65 billion after accounting for the fine, and its underlying business is expected to pick up this year as it hives off unprofitable units and property.
"Coats has made encouraging progress in 2012 and delivered results in line with market expectations, despite the challenging economic conditions," Mr Campbell says.