Spark has become the latest company to have its shareholders targeted by Zero Commission, a company that describes itself as “the New Zealand leader in genuine offers to small shareholders.”
Spark says it has received notification from Zero Commission that Zero intends to write to certain Spark shareholders with an unsolicited offer to buy their shares at $3.54 per share, six percent lower than their closing price on 12 May.
Spark says it “does not endorse this offer, or any subsequent offers made by Zero Commission to purchase shares at a discount to the market price.”
It also appears to cast doubt on the likelihood of shareholders getting paid should they choose to sell, saying “Shareholders accepting Zero Commission’s offer should be aware that they 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.”
Zero Commission was founded in 2010, to “assist smaller shareholders to conveniently dispose of small shareholdings,” according to its web site, but over the years its below market price offers to shareholders of numerous NZ Stock Exchange listed companies have provoked words of caution from company boards.
Nor is this Zero’s first approach to Spark shareholders. It wrote to them in January 2016 offering to buy at a seven percent discount on the current price.
Also, Zero fell foul of the Financial Markets Authority early in its existence. In June 2011 the FMA served the company with an enforceable undertaking setting out the information it had to provide to every shareholder to which it make a purchase offer.
Zero’s managing director and founder is Philip Briggs, a retired financial planner, who, according to Zero is “well known as a co-author of a best-selling book on investing in the NZ sharemarket.” He was also editor-in-chief of NZ Investors' Monthly magazine.
Zero says he founded the company “to give small shareholders in NZ an additional choice when disposing of small parcels of shares.”
In an explanation of its modus operandi on its web site it gives an example of a transaction describing it as “a win for the small holder, a win for the listed company which has likely reduced the number of small shareholders it is carrying and … a win for Zero which has accumulated a holding at a discount to market.”
However a Google search reveals that many companies on the receiving end of Zero’s offers have warned their shareholders against accepting these.