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Whimp offer condemned by companies, shareholder groups

Thursday 17th March 2011 2 Comments

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Company directors and shareholder representatives issued strong warnings today against accepting low-ball offers from companies associated with businessman Bernard Whimp.

Whimp caused outrage in the investment community earlier this year when he sent letters to shareholders in a number of companies offering to by shares at below market prices.

The letters did not make a comparison to market and the Government is moving to make this a requirement.

This time Whimp is offering a price above market but it is payable over 10 years and dividends are foregone. Directors say the offers are low-ball and predatory. They are targeting unsophisticated investors.

The Securities Commission yesterday urged shareholders to get advice and affected companies went public with their concerns. Today, the New Zealand Shareholders Association (NZSA) issued a warning and Vector joined the list of companies affected.

NZSA chairman John Hawkins said that the offer effectively asked people to make an interest free loan to someone they don't know for 10 years. Whimp had been banned as a company director in the past.

"Ask yourself if you would trust this man," he said.

Hawkins said that share broking firms were willing to advise people generally about the problems with these offers free of charge. No one should rush to accept the offer before obtaining advice. Hawkins said shares were always able to be sold on the stock exchange with full payment guaranteed in three days.

"Why would you want to wait 10 years?" he said.

People receiving these offers should post the reply paid envelopes back leaving them empty.

Vector chairman Michael Stiassny said he was appalled that Whimp was engaging in actions that would result in a significant financial loss to shareholders if they accepted the offer.

NZ Investment Securities LP, a company associated with Whimp, had made an offer to Vector shareholders at $3.20 per share, which is above the market price.

"This is blatant trickery and is targeting investors who may not read the 10-year payment period in the fine print or understand that they would be handing their dividends over to NZ Investment Securities LP," Stiassny said.

Yesterday DNZ Property disclosed that its shareholders were being targeted and said the offer may be ineffective as in parts of the documents have an incorrect company name.

Vector previously gave its shareholders a "second chance" to reconsider an offer from Whimp by stopping the share transfers because share transfer certificates were not correctly filled out.

Abano Healthcare said it has received a request to provide a copy of its share register to Whimp.

Securities Commission chairwoman Jane Diplock said investors should seek advice.

While it was not illegal to make an unsolicited offer to buy investments, it was against the law to mislead or deceive investors into accepting an offer, and the commission was urgently reviewing the current offers in light of that requirement.

 

NZPA



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Comments from our readers

On 17 March 2011 at 3:28 pm DickL said:
We have a similar 10 year payment offer for Contact Energy Ltd from Carlyle Securities LP
On 17 March 2011 at 8:59 pm No dope said:
Message to shareholders: send back those envelopes empty.
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