Tower to raise new capital
Trading in Tower's shares was halted ahead of Tuesday’s annual profit announcement when Tower will reveal details of its plans to raise fresh capital.
Reports hold that the New Zealand general insurer will go to the market for around $71 million.
"The trading halt has been put in place as Tower Limited is at an advanced stage of finalizing underwriting for a capital raising to be announced with its audited financial results on 14 November 2017,” the company said in a statement to the New Zealand and Australian stock exchanges.
"It wishes to ensure an orderly market while the offer terms, and sub underwriting pricing and allocations with market participants, are finalized in the next few hours."
The Auckland-based company earlier flagged its intentions to raise new equity when ending a takeover deal.
Takeover deal quashed
In June, Suncorp Group mounted a NZ$236 million takeover bid for Tower through its New Zealand unit, Vero Insurance.
But, the New Zealand’s antitrust regulator blocked the bid because it threatened to substantially lessen competition.
Had the deal gone ahead, Vero would have 30 per cent of New Zealand's insurance market.
Higher insurance premiums and less cover was a real risk if a merger between Tower and Vero had been allowed, the Commerce Commission ruled in July.
Both insurers appealed the competition watchdog’s decision.
In May, Tower reported a first half loss of $8.4 million. The results showed it had to borrow NZ30 million as it came within NZ$5 million of breaching solvency standards.
The Auckland-based general insurer needed more capital because of the impact of the 2010 and 2011 Canterbury earthquakes.
Tower subsequently advised Suncorp that it was willing to negotiate a new scheme of arrangement following completion of its plans to raise further capital.
But Suncorp said in a release last Tuesday that it will no longer be proceeding with its appeal and that it is now focused on maximising the value of its Tower shareholding.