Wellington, June 25 NZPA - A boardroom battle over the future of Sir Ron Brierley's investment company Guinness Peat Group (GPG) has erupted into the public domain.

New Zealand-based director Tony Gibbs went public today with his opposition to a plan to spin off the company's Australian assets. The company countered that the statement by Mr Gibbs was not seen by, or supported by, the board.

Sir Ron, who set GPG up when he lost control of Brierley Investments Ltd, is believed to be in the United Kingdom.

Brokers say the demerger plan has not been supported by investors and the share price fell to 61c on June 22. It rose 2c to 66c today after Mr Gibbs effectively scuppered the demerger plan by going public with his opposition.

There has been speculation for some time that Mr Gibbs and Australian-based director Gary Weiss do not agree on the future direction of the company.

In 2008 Sir Ron signalled an intention to retire in 2010, the year of the company's 20th anniversary, and promised a "substantial release of value" by then. The question as to whether GPG would continue without him was left open.

"What happens after that is largely up to my colleagues," he told NZPA at the time.

The global financial crisis ensued and the share price sank. Investors have been disappointed as promises of a return of value have not eventuated. Sir Ron said at the last annual meeting that the current business model no longer worked for GPG.

GPG announced the proposal to spin off its Australian assets last week, and said it also intends floating its thread manufacturer Coats Group within a year.

But today Mr Gibbs said he believed a different strategic approach would be preferred by GPG's shareholders.

He had advised the directors of GPG to abandon the plan, rather than spend the next six months investing time and shareholders' money developing the proposal further or seeking modifications.

Among core elements of an alternative strategy he preferred was 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 and a future return of funds, Mr Gibbs said.

At the same time the company should prepare for a trade sale or flotation of Coats as soon as practicable after the end of the December 2010 financial year, with the sale or flotation followed by the return of those proceeds to shareholders.

"I have advised the GPG board of this strategy and 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," Mr Gibbs said.

A GPG statement in the name of Phillip Tunstall said the statement by Mr Gibbs was not seen by or supported by the board of GPG.

The board was objectively reviewing shareholder feedback before considering what modifications, if any, should be incorporated into the proposal.

Sir Ron has said one of GPG's strengths is the small size of its team and that the team members all knew each other well and worked previously at Brierley Investments or IEL, the Australian arm of the company.