While the New Zealand stock exchange has been closed since last Friday, brokers at Craigs Investment Partners and Forsyth Barr arrived back at work yesterday to be inundated by calls from clients about unsolicited offers they have received in the mail to sell their shares.
It is not illegal to approach shareholders to sell their stakes, but it appears small shareholders in many listed companies are being targeted by a company with the same Auckland post office box number and street address, but using one of up to five different names on the letterhead of the otherwise identical share transfer acceptance forms.
It is known that the offer has been made to some shareholders in Fletcher Building, Vector, Fisher and Paykel Appliances, Contact Energy, Guinness Peat Group and Nuplex.
In a letter obtained by the Otago Daily Times, an Otago couple received share transfer forms from Pearson Securities LP, NZI Securities and Carlyle Securities LP, offering to buy their small stakes, of less than 10,000 shares, in three listed companies.
The offer for one tranche of shares is for about $4800, but if those shares were sold on the New Zealand stock exchange yesterday their total value would have been about $7000 - more than 30% higher than the mail-out offer.
Fletcher Building investor relations general manager Philip King said in a statement he was aware of an unsolicited offer to buy three million Fletcher shares at $5.64 - which were yesterday trading around $7.72.
He said the offer, by Cargill Securities, was "considerably below" the current share price "and appears to be an opportunistic bid to acquire shares cheaply".
Mr King recommended shareholders not accept the offer and ignore any documents they had received in the post.
A Dunedin investor who wanted to remain anonymous was one of several who contacted the newspaper to air his concerns, saying while he knew the offer was not illegal, it was being made "at a cunning time".
"People are away on holiday and the offer is only open to January 7.
"Maybe people will want some cash after Christmas ... and won't be in touch with their brokers as they usually would," the investor said.
Craigs Investment Partners broker Chris Timms received numerous calls from concerned investors yesterday, saying many felt "under pressure" with the January 7 deadline.
He reiterated it was not an illegal offer, but noted the offers did not tell investors what the value of their shares were on the stock exchange.
"They should ignore the offer and don't do anything," he said when contacted.
Aside from losing value in the shares, if an investor decided to sell, in the three-week settlement period, they would be exempt from getting any gains in rising share value, a takeover offer or potential gains made from any upgrade announcement.
"They are pariahs just feeding off people's naivety or lack of understanding," Mr Timms said.
When contacted, Forsyth Barr broker Suzanne Kinnaird said the phones had been "running hot", since she returned to work yesterday.
"Whilst not illegal, these offers are morally questionable," Ms Kinnaird said of the offers she knew of, which were 30% to more than 40% below stock exchange values yesterday.
One investor had received three separate offers for different company shareholdings, one of which was an offer which was 35% below the value at which the shares were trading yesterday.
"Investors should be extremely cautious when they receive a letter offering financial advice from someone they don't know" she said.
The Securities Commission has said in the past, when dealing with similar offers, that while it was not illegal to make an unsolicited offer to buy investments, or to offer to buy them at a price below their current market value, it was against the law to mislead or deceive investors into accepting an offer.
The commission reminded investors to be cautious of any unsolicited offer to purchase their investments, especially where the offer is well below face value, and to seek independent, professional advice before making a decision.
