Vector attacks bond ‘scavenge

Investment 'scavenger' Bob Ross is back in town, this time offering Vector capital bondholders the deal of a lifetime - sell him nearly $11,000 of bonds and get paid about $9000.

Auckland-based energy network company Vector is angry at the way its bondholders have been approached by the Australian, saying names and addresses should not be available for such purposes.

A retired dentist based in Bendigo, Victoria, Ross has come under fire for making similar offers over the past few years.

He was warned by the Commerce Commission in June 2003 that a similar offer he made to BIL International investors to buy debt securities was misleading and deceptive.

There is nothing illegal about offering bond or shareholders below-market prices, but the commission is interested in Ross because of the possibility his unsolicited letters may breach the Fair Trading Act.

The letter to bondholders stated: "Ross Investments buys securities in companies and trusts which have financial problems and/or which have a limited market."

Vector said the letter was "inappropriate and misleading" and implied financial problems.

"It is unfortunate organisations such as Ross Investments are legally able to gain access to such databases and use them in this way," it said.

"Vector has referred the matter to the appropriate regulatory authorities and strongly recommends that all bondholders who receive the letter do not accept the offer before seeking independent advice."

Ross told the Business Herald yesterday that he was not implying there was any trouble at Vector. Ross Investments "normally" targeted firms in financial difficulty or struggling - which did not mean Vector.

The company had been in business for 16 years, often buying from people who were "winding up" estates and who might not know a broker. Brokers often required extra paperwork and could not be bothered dealing with small parcels.

Ross Investments would pay money quicker than brokers and was good value for those with small holdings, he said. "It's a reasonable price," Ross said.

Direct Broking director David Speight made a complaint to the commission about the offer Ross made last year to Kiwi Income Property Trust unit holders.

Speight said Ross was again making misleading claims in letters to Vector bondholders. It was not true there was limited market for the bonds, as $7.87 million had changed hands since February 28.

Ross was offering $9050 for 10,000 bonds. Speight said a client selling the same amount through Direct Broking would pay $54.75 brokerage, but end up with $10,894 for their efforts.

"There's wall-to-wall buyers and no sellers," he said.

Vector bonds, while paying 9.75 per cent interest, also carry preferential rights in the company's looming partial privatisation and initial public offering of shares.

Leading share and bond registry Computershare has asked the Securities Commission to investigate a law change, so names and addresses of bondholders do not have to be provided to companies such as Ross Investments.

Securities Act law covers the sale of bonds and shares, but has no control over what happens when they are later traded. A new securities legislation bill before Parliament's Commerce Select Committee will cover general "dealing misconduct".