Heartland heads off low-ball offers with plan to pick up brokerage on small share parcels

Christchurch-based lender sets up share sale plan for investors.

Heartland New Zealand, the parent of the country's newest bank, is trying to head off low-ball offers to its investor base with a plan to pick up the broking fees for small shareholders who want to sell.

The Christchurch-based lender has set up a share sale plan for investors with a maximum of 10,000 shares to sell their parcels at the volume-weighted average price, in response to several offers below market price by outfits including Washington Securities. The plan essentially facilitates market matching buyers to the sellers of the small holdings, with Heartland picking up the tab for brokerage. Craigs Investment Partners and First NZ Capital have been appointed to run the scheme.

"The plan has been established in response to recent unsolicited offers made to HNZ shareholders at significantly below market price," the company said in a statement. "A key objective of the plan is to provide an alternative to these offers at a fair and current market price."

Deeply discounted bids raised the ire of regulators after Christchurch businessman Bernard Whimp embarked on a spree of offers below market pricing. Whimp has since retired from making the bids, though Melbourne-based John Armour has continued the practice through several entities.

Heartland's latest low-ball bid from Armour's Washington Securities came last month, offering to buy at 55 cents per share, a 36 percent discount to the current trading price of 86 cents.

As at June 30, 2012, some 4,747 shareholders owning 4.2 percent of the company held parcels smaller than 10,000 shares, according to Heartland's annual report. At today's price of 86 cents, that's about $14.2 million of shares, and implies broking fees of some $140,000 at $30 per transaction.

Head of treasury and strategy Craig Stephen said about 4.6 percent was held in the qualifying parcels.

(BusinessDesk)