Vector concerned shareholders bounced by low-ball offer

Thursday 27th January 2011 5 Comments

Vector chairman Michael Stiassny said it is galling that more than 300 Vector shareholders sold shares for much less than they would have received on the sharemarket when they accepted an unsolicited offer from businessman Bernard Whimp.

On December 27, companies associated with the Sydney-based businessman sent out unsolicited offers for shares in seven New Zealand corporates. The offers were all significantly below the share price on the sharemarket at the time but the documents did not make the comparison.

Whimp was banned from being a company director for four years from October 30, 2006 in New Zealand.

More than 300 Vector shareholders sold 373,209 shares, representing 0.15% of Vector shares that are available for trading.

Stiassny expressed his concern that these shareholders unwittingly sold their shares at a 34% discount to the price the shares were trading at, at the time of the offer.

"These shareholders did not receive a fair price for their shares and that absolutely galls me.

"While I fully respect the right of individuals to make their own investment decisions, the Vector board is concerned at the style in which the share offer was undertaken by Energy Securities."

Companies targeted by Whimp included Fletcher Building, Telecom, Nuplex, Guinness Peat Group, and Contact Energy.

The offer documents had language that created a sense of urgency and they were sent at a time of the year when investors may be strapped for cash and may have difficulty reaching financial advisers. Investors are helpfully provided with an amount due to them from the offers but there are no comparisons with the current market price.

The targeted companies described the offers as opportunistic.

Both NZX Market Supervision and the Securities Commission warned against low-ball offers.

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

Investor advocate Brian Gaynor has said that it is difficult to interpret the term misleading or deceptive and in Australia all offers must be in a written statement setting out the market value of the shares on the day the offer is made.

Gaynor said that disclosure of the sharemarket price and a minimum acceptance period of one month should be mandatory in New Zealand to help improve investor confidence in markets.

Stiassny said that he understood the Securities Commission was considering what actions it needed to take to ensure that investors had confidence in the New Zealand capital markets.

NZPA

Comments from our readers

On 28 January 2011 at 7:57 am Peter said:

Surely if people have enough knowledge to buy shares they should at least have enough sense to check the price readily available in the newspaper before accepting this offer.

On 28 January 2011 at 9:29 am Keith Cook said:

Just another example of the "Wild West" state of our investment markets. perhaps the Government will do something when it gets over the election spin era of this year!

On 28 January 2011 at 10:53 am Andrew said:

Its not worth regulating people that stupid

On 28 January 2011 at 9:55 pm Stuart said:

If it needs regulated to stop people being ripped off so be it.Most of our elderly have already lost their savings through shady investment companys which promised big returns.

On 12 February 2011 at 8:48 pm Nick said:

I think it's a bit uncharitable to describe the people taken in as stupid. Naive, I think. Agreed that everyone should have been able to check the current share price for themselves but I also feel that this kind of thing being legal contributes to the shabby state of our capital markets as Keith Cook suggests and would like to see at least the level of protection the Australians have.