'Shocker' share offer has devil in the detail, investors told

Christchurch businessman Bernard Whimp. Photo / Supplied

Investors are being warned of a fresh round of "shocker" low-ball share offers from companies linked to trader Bernard Whimp.

TrustPower and DNZ Property Fund are warning shareholders off yesterday's unsolicited offers, which are being investigated by the Securities Commission.

In two-page letters, TrustPower and DNZ shareholders are being offered above-market prices for their shares but in the fine print are told they will be paid off over 10 years. They miss out on dividends that would be paid out over that time.

The companies warn there is a risk shareholders may not be paid in full given the danger the purchasing company could fail over a decade-long repayment period.

A third company, Abano Healthcare Group, alerted investors its share register had been sought by Whimp or his associates and shareholders should be wary of accepting any unsolicited offers that might be coming. Abano says it knows of other listed companies whose registers had also been requested by Whimp.

The Securities Commission is investigating whether the offers received yesterday are "misleading or deceptive", and warns anyone receiving the letters to read them carefully and seek advice on what to do.

Whimp's previous predatory offers have not broken existing laws but the commission's director of investigations and litigation, Sue Brown, said she was looking closely at the latest ones.

The letters appear aimed at small investors who are told they have just a week to accept the offer on a "first-come, first-served basis" with an apparently attractive price highlighted.

Brown said shareholders should pause before taking any action, consult financial advisers, a citizens advice bureau or trusted family or friends.

Carrington Securities LP - which bought 2.2 million shares off DNZ shareholders below market price last August, is targeting TrustPower shareholders this time. Energy Securities LP targeted seven large companies shortly after Christmas and is now writing to DNZ shareholders.

TrustPower spokesman Graeme Purches said the offer was a "shocker".

"The worst case scenario is he purchases shares worth $7.17 for $9.40, pays the first instalment of 92c, and then Carrington gets wound up leaving the sellers with the loss of $6.25 per share and no future income from those shares," he said.

TrustPower had about 12,000 small shareholders and those who accepted would be unsecured creditors if Carrington failed.

"Our advice to people is to tread very warily, and get professional advice."

Purches said dividends were typically 40c a share, meaning shareholders could get 44 per cent of what Carrington would pay them per year without having to sell anything.

DNZ chairman Tim Storey said he was astounded DNZ shareholders were again being targeted by Whimp.

"The headline offer price is clearly preying on less sophisticated investors who may not see the 10-year payment period in the fine print of the offer, or understand its effect on the actual price of the offer."

In relation to previous offers, Whimp has said he would "offer whatever I feel like paying".

A law change is looming this year.

The Financial Markets (Regulators and KiwiSaver) Bill includes a regulation-making power that would enable greater regulation of unsolicited offers, including minimum-offer and cooling-off periods, disclosure of a market price, and disclosure of other relevant information.