Pressure put on Smiths City shareholders

Small shareholders in South Island retail chain Smiths City are being asked to increase their holdings above a minimum set by the New Zealand Stock Exchange or have them bought back mandatorily by the company.

Smith City said there were 831 shareholders who held less than 1000 shares, according to its annual report for the year to April 2011.

NZX listing rules require shareholdings, where the share price is between 25 cents and 50c, to be at least 1000 shares.

The Smiths City board was asking those shareholders to increase their holding over 1000 shares on or before January 31.

If that was not done, the company would make a formal offer to buy back the shareholders' entire holding at the average price per share for the 10 days from December 22, after the company's publication of its half-year report.

The company would pay the administrative costs from the share purchases.

''If you do not take up the company's offer to purchase your shares, the Company must then, in accordance with Article 8.4 of the Company's Constitution sell your shares (on a date no less than three months and one week from the date of this letter) on the NZX on your behalf.

''The net proceeds of the sale of your shares will be paid to you.''

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