SCF and Securities Commission step on Whimp

Wednesday 11th August 2010 3 Comments

DNZ Property Fund shareholders and South Canterbury Finance debenture-holders need to be on the look-out for low-ball offers from entities connected to banned company director Bernard Whimp.

Both the Securities Commission and SCF chief executive Sandy Maier are issuing the warnings, which the commission says are increasingly common to investors in struggling companies.

The regulator has already issued seven warnings this year, five of which were sub-par offers.

The latest was an offer from disqualified director Bernard Whimp's Carrington Securities LP for shares in DNZ Property Fund, which is due to float on the NZX this month, and comes after a rash of low offers for failed finance companies' debenture stock from Australian outfit Stock & Share Trading.

"These offers come up, go away, then are replaced by something else," said Sue Brown, the regulator's director of primary markets.

"The difference between the secondary market price and the primary is that there's no established price, which is why we issued the warning on the DNZ offer."

Whimp was banned from being a company director for four years in October 2006 after the Deputy Companies Registrar found he was linked to the mismanagement of at least two failed companies.

In 2003, his contributory mortgage business, General Mortgages, was put into statutory management by the Securities Commission.

Though making a low-ball offer isn't illegal, Brown said investors are entitled to clarity "in terms of the value".

Timaru financier SCF warned investors they could expect a low-ball offer from Lineside Partners LP, another Whimp entity.

Lineside requested access to the registers of holders for one tranche of SCF bonds and its perpetual shares, and chief executive Sandy Maeir said he expects investors to receive a low-ball offer for their securities.

"We strongly urge South Canterbury Finance investors to consult with their investment or other professional adviser if they receive any offer from any third party for their securities," Maier said in a statement.

"South Canterbury Finance strongly values the support of all of its investors and has achieved significant progress in restoring the business to a sustainable platform."

Last week, the lender said a 39% slump in the price of its preference shares to 10 cents was due to a financial adviser telling clients the firm will struggle to find a new cornerstone investor.

Maier said the company is focused on the turnaround of its profitability and introducing new equity into the business.

Businesswire.co.nz

Comments from our readers

On 11 August 2010 at 3:04 pm BTW said:

Why is the Commission now making value judgements about the market worth of particular debenture stock? I don't recall them doing this when the stock was being issued at 100c in the dollar, or more recently, during the Allied-Hanover deal. The Commission's desire for "clarity in terms of value" would have been more useful when the stock was issued.

On 11 August 2010 at 3:21 pm Roger said:

When you receive one of these ridiculous offers for shares in struggling companies just return the empty envelope to them without a stamp. Hopefully they will have to pay postage.

On 12 August 2010 at 10:02 am bc said:

I like your idea Roger!