Tower Insurance has advised its shareholders that it does not endorse a company making unsolicited offers to buy their shares at a discounted price.
The Kiwi insurer sent out a market notification asserting that Tower shareholders are under no obligation to accept any offer or take any action regarding the offer by Zero Commission NZ Ltd.
Tower is believed to be one of several companies being targeted by Zero Commission.
The company had advised Tower that it was going to send out an offer on 8 July but then withdrew it.
According to a New Zealand Herald
report from February this year, the company is jointly owned by Roy Jackson and Philip Briggs and based on Waiheke Island. The Companies Office lists Jackson as the sole director.
The warning from Tower states that Zero Commission intends to write to shareholders holding parcels of between 200-750 shares with an offer to buy their shares at $1.72 per share.
At close of trading on Monday the market price for Tower shares was $1.82 per share.
The proposed offer was expected to close on 9 September after opening yesterday (Tuesday.)
“Tower does not endorse this offer, or any subsequent offers made by Zero Commission,” said the statement.
“Tower recommends that shareholders who receive an offer from Zero Commission
- Read Zero Commission’s disclosure document and terms of offer carefully and thoroughly
- Seek independent financial and/or legal advice if they are uncertain about this matter or are contemplating selling their Tower shares; and
- Check the most recent market price for Tower shares.”
Like its name suggests, Zero Commission, which made offers on GuocoLeisure and Allied Farmers earlier this year, says it charges no commission whereas brokers will charge a brokerage fee of between $30-$100.
While the offers are legal, because they meet the disclosure requirements of the Securities Market (Unsolicited Offers) Regulations, shareholders are likely to be in the position of being an unsecured creditor of Zero Commission during the period between their shares being transferred to Zero Commission and receiving full payment from Zero Commission.
The New Zealand Herald
article, an opinion
piece by Brian Gaynor, points out that Zero appears to be a $100 capital company with Jackson and Briggs contributing just $50 each.
Jackson was a member of the NZX and a principal of stockbrokesr Morrow & Benjamin which was extremely high profile and profitable during the 1980s sharemarket boom, Gaynor said.
Briggs founded NZ Investor Monthly and was one of the original directors of Direct Broking, the low-fee broker, he said.
Gaynor said: “It is sad to see Jackson and Briggs trying to make a few dollars from deeply discounted offers to shareholders in poorly performing companies.
“It is a shame, in my view, that these highly successful businessmen cannot find a more meaningful way to use their extensive sharemarket experience.”
Tower also reminded shareholders that they have the right to cancel any acceptance of the offer up to 10 working days after the date of acceptance.
Briggs told Insurance Business their offer was merely standard practice. "Our offer should be attractive to small shareholders who wish to dispose of their shares in a cost effective manner," he said.