Low-ball investor targets Rural Equities
NBR Rich Listers the Cushing family are calling on the Financial Markets Authority to tighten share register rules after Rural Equities became a low-ball target.
Australia's Stock and Share Trading has made an offer to shareholders of the farming group that is about 29% below their market price.
Stock and Share is offering to buy shares at $2.30 apiece, below the $3.22 they traded at yesterday on the Unlisted platform.
Rural Equities executive chairman David Cushing, son of Sir Selwyn, is frustrated by the repeated offers but says it has been told by the FMA it is legally required to provide its share register.
"To compel the board of directors to provide the share register to any party without appropriate screening should be reviewed," he says.
Commerce Minister Craig Foss says says regulations to rein in low-ball offers should be in place by the end of the year, while the FMA says the Financial Markets Conduct Bill includes proposed provisions regarding share register requests, which would give FMA and companies grounds to decline certain requests..
Mr Cushing says Stock and Share picked up 100,000 shares in a previous low offer and sold them immediately for a profit of about 90 cents each.
"To make three written offers within 12 months, all at vast discounts to market price, is pretty unsatisfactory. It's a rather frustrating situation for the directors and shareholders."
Rural Equities, New Zealand’s only publicly traded land ownership company, is 55%-owned by the Cushings’ investment vehicle, H&G.
Stock and Share has recently made offers for certain capital notes issued by Fletcher Building Industries Limited and Tower shares, prompting a warning from the FMA earlier this month.
Stock and Share says it complies
Melbourne-based Stock and Share is owned by John Armour and his firm is represented in New Zealand by Andrew Kennedy of Auckland law firm Prudentia Law.
Mr Kennedy confirmed he represents the Australian firm, which he says is complying with New Zealand's financial regulations.
"The Financial Markets Authority has been in discussion with it and there are requirements that my client is meeting in terms of disclosure and how the offers are vetted," he told BusinessDesk.
The proposal is the third such approach to Rural Equities' shareholders in the past 12 months. Wellington-based investment firm Rangatira's Unlisted shares were also targeted last month with a low-ball offer.
Firms such as Stock and Share take advantage of corporate regulation that allows them to demand a company's shareholder list.
They often target holders of smaller parcels of shares who may not keep track of the price and are attracted to the prospect of quick cash.
The offers are legal and the targeted companies generally respond by pointing out how much of a discount the offer is to recent trading and urging shareholders to get proper financial advice before accepting.
"At the end of the day, the investor is the one that has to make the decision," says David Wallace, Unlisted's market manager.
"These sorts of offers just create confusion and despondency about New Zealand's capital markets and I hope the FMA responds appropriately."
- with reporting by BusinessDesk