South Canterbury Finance - in the midst of a massive restructuring and recapitalisation - has alerted its security holders to be wary of a potential "predatory offer" which could be made for some of its bonds and preference shares.
Last week, South Canterbury's preference shares, which raised $100 million about four years ago, had fallen in value from their $1 issue price to a record low of 9c each, but were trading up yesterday around 14c.
South Canterbury chief executive Sandy Maier named Christchurch-based Bernard Whimp, of Lineside Partners LP, as having requested access to the registers of holders of one tranche of South Canterbury bonds and its preference shares.
While complying with obligations under the Securities Act 1978 to provide copies of the registers, Mr Maier had also alerted the Securities Commission.
"The company considers that these requests may be a preliminary step, taken ahead of an offer to investors," Mr Maier said in a statement yesterday.
He said it was an unfortunate reality that speculators could try to profit from "lowball offers" at the expense of existing security holders, noting that in Australia and the UK there were regulations offering investors some protection from these "predatory offers".
"We strongly urge South Canterbury Finance investors to consult with their investment or other professional adviser if they receive an offer from any third party for their securities," Mr Maier said.
A trustee waiver, covering the amount of cash South Canterbury must carry to operate, expires at the end of the month.
South Canterbury remains in negotiations with several parties to raise fresh equity of up to $180 million, which would make it again compliant with the trustee deed.
Mr Maier said South Canterbury's focus remained "firmly on the turnaround and introduction of new equity into the business" and "has achieved significant progress in restoring the business to a sustainable platform".
