GPG shares spiked on the announcement, gaining 10% within hours to trade up at 77c.
A failed GPG group restructuring proposal last year, which sparked dissent from shareholders and institutional investors, also became the catalyst to a boardroom stoush prompting Sir Ron to step aside; followed by the appointment of an independent board.
Forsyth Barr broker Suzanne Kinnaird said the proposed return to shareholders was greeted positively by the market yesterday; reflected in the 10% gain.
"The current share price of 77c is still at a significant discount to our current calculation of the net asset value of $1.14c.
"That shows there's still some caution being factored in by investors regarding the realisable value of the unlisted holdings and long-term value of Coats," she said.
Following the boardroom rift, Sir Ron stood down as GPG's executive chairman in early December, but continued as an executive director and was replaced by banker Mark Johnson.
Yesterday's announcement reflects some of the turmoil and in-fighting during the past year.
In late August last year GPG's New Zealand-based director, Tony Gibbs, a stalwart for almost 20 years, was dumped by the board for speaking out against a demerger proposal - to spin off and float $NZ580 million of Australian assets.
Mr Gibbs retained his role as chairman of insurer Tower and Turners and Growers, in which GPG holds large stakes.
In a surprise personal view lodged with the New Zealand stock exchange at the time, Mr Gibbs called for the board-backed demerger plan to be abandoned.
He had publicly approved when it was announced in mid-June.
However, he subsequently said it did not have shareholder support and would not succeed.
Mr Gibbs instead advocated a year-end cash distribution to shareholders, restructuring of the GPG Group and preparation made for the sale or float of loss-making London-based Coats, with the proceeds returned to shareholders.
He was reported by The New Zealand Herald yesterday to have welcomed the move, saying this was exactly what he had been pushing for.
"The new independent board have done a good job. Now we just have to make sure they implement it," Mr Gibbs said.
He said he had promised New Zealand shareholders the next annual meeting would be held in New Zealand, and was pleased the GPG board had held to that.
"Small shareholders need to have a chance to ask questions of the directors."
A sub-committee of four independent GPG non-executive directors made recommendations to GPG's board recently to sell assets following an evaluation, citing a "disappointing performance" in recent years, the existence of some actual and contingent liabilities, including capital notes, pension liabilities and potential payment of a European Commission fine and a "lack of value transparency", with some investments being unlisted, the largest of which is the Coats' investment.
GPG chairman Mark Johnson said in a controlled sale of assets, the overall portfolio may be reduced to just the holding in thread-maker Coats in the United Kingdom.
"Coats was adversely affected by the global downturn in 2008 and 2009. However, the business has since improved and the benefits of the extensive restructuring ... have begun to materialise," Mr Johnson said in a market statement.
The capital return to shareholders is subject to shareholder, tax and other approvals, and Mr Johnson said GPG would not make new investments, but would contribute capital to existing investments, if it was considered to be value-enhancing.
