Whimp defends 'low ball' share offers after backing off lawsuit against Vector

Friday, 22 March 2019

Bernard Whimp says he setting up an overseas investment entity that will identify company securities that may be purchased at a discount.

Christchurch businessman Bernard Whimp says that an initial $7000 investment in mailing out 'low ball' share offers in 2011 eventually gave him a profit over several transactions of $3.6 million.

He was in the news this week for abandoning High Court proceedings against energy company Vector which refused to transfer investors' shares for what it called a 'predatory' offer to 300 shareholders.

Whimp said the legal arguments were about technicalities of share transfers and it was a commercial decision to abandon the lawsuit.

'We might have won but we're not in the business or running actions we might win.'

**READ MORE:

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Whimp said his initial $7000 investment in 2011 paid for the mailout costs of his first offer, which he sold at sufficient profit to launch several more.

Shares buyers were not required to front up with the money immediately, allowing time to sell them at a profit.

Whimp had made offers to shareholders of at least seven listed companies including Vector, Contact Energy, Telecom, Fisher & Paykel, TrustPower, Guinness Peat Group and Fletcher Building - at prices approximately 30 per cent below listed prices.

He also made offers for debt securities in South Canterbury Finance and Strategic Finance which collapsed soon afterwards.

Bernard Whimp in 2011 with lawyer Nicholas Till, QC, after the Securities Commission was awarded an injunction to prevent him taking ownership of shares at that time.

Whimp said the South Canterbury Finance debt security investors subsequently lost all their money, and Strategic Finance investors received 20 cents in the dollar over five years.

'That shows my offer of 10 cents in the dollar for Strategic was about right.

'Directors and financial advisers were calling me a predator. But it was simply that my offers upset the carefully crafted messages of directors trying to control distressed assets.

'If it was someone was buying or selling a car, why should they regard the market price as market value?

'A lot of stock exchange-listed shares might only be worth half the listed price, and there are quite a lot of Vector shareholders who would have received their shares only as a result of being customers.

'They may not have bought them on-market, and a lot of them won't have accounts with sharebrokers, which can be a hassle to set up, and there's a fee.

'So when they received an offer from me all they had to do was sign them over.

'I've had feedback from lots of people saying they wished they'd thought of it.'

Whimp said that in coming weeks he would launch an investment vehicle with similar offers.

He was raised in Christchurch and is currently based in Rangiora. His brother Simon Henry is a wealthy property investor who changed his surname many years ago, while another brother is also a successful businessman.

In the aftermath of Whimp's low ball offers in 2011 the government introduced the Securities Markets (Unsolicited Offers) Regulations 2012.

The new regulations made it far more complicated to make offers, including providing more information about current market prices.

In a statement this week, Vector said its shareholders would have taken a financial loss if they had accepted the Whimp offer.

'After having now successfully staved off Mr Whimp's attempts to benefit from these various particular purchases, Vector wants to remind all Kiwi investors to stay vigilant and seek professional advice if they ever receive unsolicited offers to purchase shares.

Vector's chief executive Simon Mackenzie said, Vector had fought hard to condemn and discourage 'the type of predatory behaviour carried out by Mr Whimp'.

'This includes fighting Mr Whimp's attempts to financially benefit from his actions in the courts, and advocating for changes to legislation which would offer shareholders better protection from these low ball unsolicited offers.

'While we are pleased with this latest outcome - we are conscious that people like Bernard Whimp may still be active in the market, and we encourage everyone with a shareholding in any company to always take professional advice before accepting any unsolicited offers they receive for their shares,' MacKenzie said.

Advice about unsolicited offers is available on the FMA website.