Heartland latest low-ball target

Last updated 16:19 18/07/2013

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Regulations created to rein in predatory share offers have helped but they are not enough, Heartland New Zealand says.

Heartland shareholders have become the latest group to be sent a low-ball share offer from John Armour, the sole director of Australian companies Washington Securities and Stock & Share Trading Company.

Heartland group general counsel Michael Jonas said the regulations, which came into effect at the end of last year and are policed by market regulator, the Financial Markets Authority, had not deterred people from making unsolicited offers.

''In short what the FMA has done has been helpful, but I would like to see more.''

Jonas said the offer document should be clearer, more concise, and include background information on the company making the offer and its directors.

Commerce Minister Craig Foss said in November that the offers damaged the health of New Zealand's capital markets.

The regulations required greater disclosure by the company making the offer, so as to not mislead investors.

A spokesperson for the Ministry of Business Innovation and Employment said there were not any plans to further tighten the regulations, or impose an outright ban on unsolicited share offers.

The FMA said although it was actively monitoring unsolicited offers made under the new regulations, it was too still early to judge the impact on investors and the overall market.

The changes have not stopped Armour, an Australian lawyer, from making a string of offers to Heartland and other listed companies including Vector, Tower, Fletcher Building, and Dorchester Pacific.

Heartland investors today received a third notice from Armour, offering to buy shares at 55 cents a share which is below the market value of 87c.

The share price of the NZX-listed bank was down 1.2 per cent to 86c this afternoon.

Jonas said the offers did not match his view of ethics.

''My view is that they prey on people who are not well informed.''

Yesterday Dorchester Pacific chief executive Paul Byrnes also said the offers took advantage of shareholders who were not particularly financially literate.

Low-ball share offers hit the headlines in 2010 and 2011 when more than 300 Vector shareholders responded to an unsolicited offer from Bernard Whimp and sold their shares for well below the market value.

Vector chairman Michael Stiassny has spoken out against unsolicited offers in the past, saying they should be banned.

Armour issued a spate of offers through his company Stock & Share Trading starting in 2010, and after a FMA warning began doing the same thing via Washington Securities, which was incorporated in February.

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Jonas said Heartland's share register showed Armour  held more than 1 million shares in the company.

Whimp, who had also targeted Heartland in the past, at one point held 2 million shares, about 0.5 per cent of the register, but had since sold down, Jonas said.

According to Australian media reports, Armour has previously been a consultant to Australian law firm Piper Alderman, a staff lawyer for oil firm Santos, and has done legal work for Australian share scavenger David Tweed, well known for making unsolicited underpriced offers to shareholders in listed companies.

Prudentia Law's Andrew Kennedy, the lawyer for Washington Securities and Stock & Share Trading, said he could not comment on the offers and the only way to contact Armour was by post.

FMA regulations state that an unsolicited offer had to include the market price of the shares, and a minimum offer period and cancellation period.

People who do not comply with the regulations could be fined as much as $30,000.

- BusinessDay.co.nz

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