Four days after going public with an attack on plans to split the business, GPG's executive director in New Zealand, Tony Gibbs, has been forced out of the company.

His removal was reported yesterday in a statement to the ASX and NZ Stock Exchange.

GPG announced plans for the corporate reconstruction on June 16, but last Friday Mr Gibbs lodged a statement with the NZX calling for the proposal to be abandoned.

But his departure and statement last Friday appear to have forced GPG to look to find and appoint more independent directors and then set up a sub committee of those directors to review the proposals, without any involvement from Sir Ron and his fellow executive directors.

That is a significant change for GPG and the management team.

Yesterday GPG said:

On 16 June 2010, Guinness Peat Group plc (GPG) announced plans to pursue a corporate reconstruction (the Proposal) to enhance and unlock value for all GPG shareholders.

The unanimous Board decision to publicly announce the Proposal followed extensive independent expert advice and detailed consideration by the Board of alternative ways to optimise value for all GPG shareholders.

On Friday 25 June 2010, one of GPG's executive directors, Mr Tony Gibbs, lodged a statement with the NZX which expressed his personal views on the GPG Proposal.

The statement by Mr Gibbs was not seen or authorised by the Board of GPG prior to its release.

The GPG Board is disappointed that Mr Gibbs chose to express his views publicly without consultation with the Board, particularly in light of the fact that Mr Gibbs approved the Proposal and the 16 June announcement.

Following careful consideration of these matters, the Board has today resolved, in accordance with Article 97(e), to terminate the appointment of Mr Gibbs as an Executive Director and has further resolved that his office as a Director of Guinness Peat Group plc be vacated. Consequently, Mr Gibbs has ceased to be a Director of the company.

GPG's Chairman Sir Ron Brierley commented that "This action has been taken with much sadness but was unavoidable. Tony was a great achiever for GPG in earlier times and we worked together, closely and effectively, for nearly 20 years.

More recently, however, there have been increasing difficulties, culminating in last week's serious breach of boardroom protocol.

In the circumstances, there was no alternative to the action taken".

The Board is of the view that the strategy proposed by Mr Gibbs in his personal statement is inappropriate because it fails to take account of the complexities inherent in GPG's current structure.

In his statement last Friday, Mr Gibbs said he believed a different strategic approach would be preferred by GPG's shareholders.

He suggested a cash distribution to shareholders to be paid before the end of the year, and restructuring of GPG to enable an efficient exit of Coats (the UK threads company) and a future return of funds.

That seems to have produced a change of tack from GPG.

In yesterday's statement retiring chairman, Sir Ron Brierley said that in light of recent developments and shareholder feedback GPG would seek to appoint up to three independent, non-executive directors to the board as soon as practicable.

He said he would conduct an appropriate process and work with GPG's advisers to identify and appoint those independent directors.

After that, an independent sub-committee of the board would be established, comprising the non-executive directors.

It would:

  • Review the proposal as well as previous internal and external analysis underpinning its key elements and reasons for rejecting alternatives,
  • Consider variations and modifications to the proposal, if any,
  • Consult with GPG shareholders and consider their views,
  • Fully disclose all relevant information to shareholders when appropriate to enable a fully informed decision to be made, including an overview of all alternatives considered and reasons for rejection, and
  • Implement a restructuring process if it was determined to be in shareholders' best interests.

    • GPG shares fell 2c yesterday to 52.5c.

    That's 2.5c lower than on June 16 when the demerger proposal was first revealed.