Guinness Peat Group (GPG) director Tony Gibbs said on Friday that the company must abandon its planned spin off on its Australian operation, which it announced last week along with its intention to float Coats Group within the year.

Mr Gibbs said that GPG shareholders could be more appreciative of a different strategic approach as he advised company directors to jettison the plan or they could find themselves "spending the next six months investing time and shareholders' money developing the proposal further or seeking modifications."

He said that shareholders could be more welcoming to cash distribution which would be paid before the end of this year while "we implement restructuring of GPG to enable an efficient exit of Coats and a future return of funds."

Around the same time, GPG should prepare for a trade sale or flotation of Coats, possibly after the end of the December 2010 financial year, and should be followed immediately by the return of sales proceeds to shareholders.

Mr Gibbs said that he has conferred with the GPG board on this new strategy and "I believe a public statement of my view is important as I intend to engage with our shareholders to better understand their views over the coming weeks."