Whimp back with legal bid to force purchase of Contact Energy shares

Contact Energy has confirmed it is defending a legal bid made by Bernard Whimp to force through incomplete agreements made to the energy firm's shareholders several years ago.

Christchurch businessman Mr Whimp is infamous for offering to buy shares from New Zealand investors, generally below market value. While not illegal at the time, the low-balling tactics were viewed as unethical as Mr Whimp preyed on investor naivety. In 2011 the High Court cancelled acceptances of 'low-ball' payment offers made for some listed companies by Mr Whimp and has banned him from making any such future offers.

Six years later Mr Whimp, through his limited partnership NZ Investment Securities, is pursuing Contact share transfers he believes he is due through the courts.

The matter is in pre-trial and a telephone conference was scheduled for today.

“Our position, backed by legal advice now and at the time, is that Contact acted in a lawful manner. We are opposing his challenge to protect the best interests of shareholders by seeking to protect them from the actions that the law change was intended to prevent,” a Contact Energy spokesman says.

Vector is also defending a claim from Energy Securities which is controlled by Bernard Whimp, in relation to low-ball share offers. It says in a statement: "As the matter is before the court, we are limited in our comments but note that the issues around these offers are well known and were reported on at the time."

A TrustPower spokesman confirmed it is also facing a similar suit from Mr Whimp relating to the entity Power Shares. That case is being dealt with at the District Court level. 

Almost 1200 investors, with a combined $7.2 million of shares in six listed firms, had accepted his deferred payment offers. The offer contact appeared to be at a premium to the market price but fine print revealed that the investors would be paid in instalments over time, thereby undervaluing the shares.

In 2012 then-commerce minister Craig Foss introduced new regulations to keep a lid on low-ball offers for stocks, bonds and other securities.

The regulations govern how unsolicited offers to investors can be made, including stricter disclosure requirements and imposing minimum offer and cancellation periods.

"Predatory or low-ball offers damage the health of our capital markets," Mr Foss said. "The new regulations govern how unsolicited offers can be made and protect shareholders from misleading offers."

Mr Whimp’s barrister, Tim Herbert refused to comment on the story. 

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