UPDATED: The Securities Commission has been vocal today, issuing two warnings in half an hour that told investors to be wary of an offer for St Laurence Finance debentures and an unusually optimistic gold mining company proposal.
The organisation is due to be replaced by a new super regulator next year, but still has plenty of work to do, with the two warnings issued around lunchtime today.
The first told debenture holders in failed company St Laurence Finance to be wary of a new offer to buy those debentures for 8c in the dollar.
The second – issued 32 minutes later – helpfully pointed out that an offer from 999 Gold Mining Corporation that promised a 100% return on investment was too good to be true.
The Commission said 999 Gold Mining may be offering securities to members of the public in New Zealand but did not have a registered prospectus or investment statement for its offer.
The forecast of a 100% return was also greeted with scepticism by the Commission, and it urged anybody considering the offer to seek professional advice..
Meanwhile, the unsolicited offer by Stock and Share Trading Company Pty for St Laurence debentures is well below the face value of the debentures, and follows an earlier offer for 20 cents per Class A secured debenture made by the same group last month.
Perpetual Trust put St Laurence, one of the country’s largest property businesses, into receivership last week – owing 9000 investors $245 million.
Investors have been warned they may get as little as 28c in the dollar.
The Securities Commission today urged investors to seek professional advice before making a decision about the offer.
In a statement, the commission said it was difficult to accurately assess the value of a finance company’s debentures when it is in receivership, especially when these debentures were not trading on any organised market, resulting in no market price for investors to compare the offer against.
Commission chairwoman Jane Diplock – who is due to step away from the world of regulation when the super-regulator goes into action - said investors should be “especially wary” when an unsolicited offer is for well below face-value.
“Such an offer does not mean that 8c in the dollar is the true value of the securities. Offers sometimes try to exploit doubts about the value of debentures, so it’s important that investors get advice from a reputable financial adviser before coming to a decision.”
The commission pointed out that while it is not illegal to offer to buy securities below their face value, such offers must not be misleading or deceptive.
The Stock & Share Trading Company is an Australian-based outfit that registered as a New Zealand company in February.
Thu, 06 May 2010