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Low-ball investor targets Unlisted platform with offer for Rural Equities

Tuesday 18th September 2012

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Australia's Stock and Share Trading has again targeted companies on the Unlisted platform, with an offer to shareholders of Rural Equities that is about 29 percent below their market price.

Stock and Share is offering to buy shares at $2.30 apiece, below the $3.22 they traded at yesterday.

Stock and Share is owned by John Armour and his firm is represented in New Zealand by Andrew Kennedy of Auckland law firm Prudentia Law. Kennedy confirmed he represents the Australian firm, which he says is complying with New Zealand's financial regulations.

"The FMA has been in discussion with it and there are requirements that my client is meeting in terms of disclosure and how the offers are vetted," Kennedy told BusinessDesk.

The proposal is the third such approach to Rural Equities' shareholders in the past 12 months. Wellington-based investment firm Rangatira's Unlisted shares were also targeted last month with a low-ball offer.

Firms such as Stock and Share take advantage of corporate regulation that allows them to demand a company's shareholder list. They often target holders of smaller parcels of shares who may not keep track of the price and are attracted to the prospect of quick cash.

The offers are legal and the targeted companies generally respond by pointing out how much of a discount the offer is to recent trading and urging shareholders to get proper financial advice before accepting.

"At the end of the day the investor is the one that has to make the decision," said David Wallace, Unlisted's market manager. "These sorts of offers just create confusion and despondency about New Zealand's capital markets and I hope the FMA (Financial Markets Authority) responds appropriately."

Rural Equities, the farming group controlled by the family of businessman Selwyn Cushing, says the latest approach has been made to major shareholders as well as holders of small parcels.

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