Investors urged to spurn lowball stock offers

Wednesday 29th December 2010 5 Comments

Investors in six leading New Zealand companies are being urged not to accept unsolicited and opportunistic offers for their shares at prices wildly below where the stocks are trading on NZX.

The offers are for shares in Vector, Fletcher Building, Telecom, Nuplex, Guinness Peat Group, and Contact Energy.

Energy Securities LP sent out a letter offering $1.56 per share for Vector shares - which is 79 cents less per share than Vector was trading at on the NZX today.

NZPA has also seen a document from NZ Investment Securities LP offering $4.07 for Contact Energy shares when they are trading at $6.20 today. While a document from Carlyle Securities is offering $1.43 for Telecom shares when they were trading at $2.17 today.

The documents have language that creates a sense of urgency and are being sent at a time of the year when investors may be strapped for cash. Investors are helpfully provided with an amount due to them from the offers but there are no comparisons with the current market price.

Fletcher Building said the offer for its shares is from Cargill Securities LP at $5.64 a share, which is well below the $7.72 the stock was trading at this afternoon.

"The offer by Cargill Securities has not been endorsed by Fletcher Building and appears to be an opportunistic bid to acquire shares cheaply," Fletcher Building said.

"It is recommended that shareholders not accept the offer and ignore the documents sent to them by Cargill Securities."

NZX Market Supervision also today urged caution with respect to the offers.

"Shareholders should take the time to compare the market price of their securities with the unsolicited offer they have received before making any decisions to sell their securities," the NZXMS said.

Energy Securities is attempting to snare 5 million Vector shares and if they sold them on market straight away they will stand to make a cool $4 million.

One of the people behind Energy Securities' offer is businessman Bernard Whimp, whose address is registered with the companies office as 93 Liverpool St, Sydney.

In August, the Securities Commission said it had received a number of complaints from investors about unsolicited offers from different people.

It warned people to be aware of the pitfalls.

It was not illegal to make an unsolicited offer or even to buy at a price below the current market value, the Securities Commission said at the time, but it was against the law to mislead or deceive investors into accepting an offer.

"Inexperienced or elderly shareholders, or those under immediate financial pressure, are most at risk of signing away their investments without carefully reading the offer and taking the time to make a few important checks," the commission said.

Shareholders were urged to seek advice and support.

They should also ask what the person making the offer had to gain.

The letter from Energy Securities for Vector shares urged shareholders to "Act now" if they wished to accept.

The offer was open until January 7 or until it had received acceptances for 5 million shares.

It was "first come, first served," Energy Securities said.

The letter said that the offer complied with New Zealand law and it advised shareholders to obtain advice before accepting.

Energy Securities said that it made no recommendation or representation as to the fairness or merits of the offer.

Helpfully, the letter added: "The offer price does not, and should not be taken to constitute a representation as to the value of your shares."

NZPA

Comments from our readers

On 29 December 2010 at 6:38 pm Dave said:

As a suggestion to anyone receiving these unsolicited offers - pop the supplied Freepost envelope in the mail - empty of course!! That should get the message through if enough of us do it.

On 29 December 2010 at 9:57 pm ian said:

bernard whimp is scum

On 30 December 2010 at 6:42 am Wendy said:

Posting the empty envelope is a good idea,despicable scumbags as its the older people they suck in.

On 30 December 2010 at 7:37 am Barrie said:

Also Fisher and Paykel Appliances

On 30 December 2010 at 1:53 pm Linda said:

Can anyone be so naive as to accept these offers without checking the market price first?