Sloppy paperwork to cost Whimp

Friday, 11 February 2011

Hundreds of shareholders who accepted a low-ball share offer over the Christmas period are being given the chance to reconsider after hundreds of transfer requests were rejected because of sloppy paperwork.

Shareholders in at least six major NZX listed companies were targeted by Christchurch businessman Bernard Whimp in late December, offering up to 40 per cent below market value. The offer did not mention the market value of the shares and urged shareholders to act immediately.

The offer was criticised for targeting vulnerable investors during a time of financial strain when financial advisers were probably on holiday.

But estimates of how much Mr Whimp profited from the scheme are being scaled back as it becomes clear how many of the transfer requests sent to the companies were incomplete.

Vector, which earlier revealed that more than 300 of its shareholders had taken up the offer, announced yesterday that chairman Michael Stiassny had written to 170 investors explaining that incomplete forms meant they could reconsider.

The letter avoided directly advising shareholders to reject Mr Whimp's approach, but twice pointed out how far below market value 'the Whimp offer' was.

Telecom also revealed that it had received requests for transfers on behalf of 116 shareholders holding 120,000 shares, but that only a third of the forms – representing 42,000 shares – had the required information to be processed.

Nuplex said forms were incorrect for about 22,000 of 50,000 shares involved. Fisher & Paykel Appliances said it had received share transfer requests on behalf of 15 shareholders who collectively held 27,000 shares, although an undisclosed number had been rejected by share registrars Computershare because they were incomplete.

Fletcher Building was the first of the targeted companies to reveal that many of the transfers its registrars received were incomplete, and it was scanning each individually to see whether it should be rejected.

Fletcher Building said last week that it had received transfer requests for 70 shareholders who accounted for 61,000 shares.

Mr Whimp previously bought 2.2 million shares in property company DNZ at well below market value through a similar scheme, and his efforts have sparked calls for tighter rules around unsolicited offers for shares, such as requiring those making offers to disclose the market price and restricting access to share registers.

The Securities Commission has said it is working with the Ministry of Economic Development over possible changes, however these could require legislative change.

While Mr Whimp appears to have gained acceptances for shares worth hundreds of thousands of dollars, the cost of the mailout is likely to have been high. A number of shareholders claim they returned empty envelopes to Mr Whimp so that he incurred added postage costs.

WHIMP'S DEALS SOMETIMES RUN FOUL OF THE LAW

Bernard Terence Whimp has a chequered history in businesses.

The oldest of four brothers and a sister, Bernard Whimp's business troubles date back to 1998 when he was made bankrupt. The bankruptcy was annulled in 2001 after he secured a deal with his creditors.

In 2003 he came under scrutiny again as the alleged brains behind General Mortgage, a Christchurch contributory mortgage business which ran foul of the Securities Commission which appointed Christchurch accountants David Chrichton and Kieran Horne as brokers to manage $30 million of General Mortgages' loans.

The Securities Commission said General Mortgage had failed to comply with the law, including requirements to prepare and file financial statements on time, and to provide information to investors.

In November 2006, Mr Whimp was banned from working as a company director for four years by the deputy registrar of companies Peter Barker who said Mr Whimp did not fully understand his responsibilities as a director and his actions called for a 'substantial' period of prohibition.

In April 2007 a Christchurch District Court jury found Mr Whimp guilty of trying to conceal information from an official investigation into his business affairs in 2004. He was found guilty on seven charges of unlawfully removing records from his office, seven of failing to comply with notice from a liquidator to deliver company records, and one of burglary.

Mr Whimp's application for leave to appeal his sentence of 250 hours of community work was dismissed. In the same year he completed a creditor-approved payment plan to avoid bankruptcy.

But last year he made money from buying shares cheaply from uninformed investors who did not know their value.

Brothers Tristram and Simon are also property developers. In 2007 their mother came to Tristram's aid and provided a $100,000 guarantee to give him time to secure funds to avoid bankruptcy.