Many Wanganui residents and ordinary "mum and dad" Powerco shareholders could be left out of pocket if they don't sell shares soon, sharemarket adviser Hamish Mackay says.
Shareholders had received purchase offers from Prime Infrastructure, an Australian-based company, which had purchased over 50 percent of Powerco shares and made a full takeover offer.
ABN AMRO Craigs director Mr Mackay said small shareholders may be forced to give up their shares and receive no cash compensation for them ? they would get bonds instead.
"If shareholders do nothing, and if Prime is able to acquire at least 90 percent of total shares on issue, then Prime will compulsorily acquire their shares."
A lot of ordinary people had never imagined having to sell their shares when they were distributed to electricity consumers in 1993, he said.
Mary Smyth, 77, of Wanganui, agreed to sell her shares yesterday after advice over the phone from her accountant.
"A lot of elderly people like myself do not know the first thing about lawyers or accountants."
It was easy to deal with and she simply dealt with the shares over the phone, she said.
"I am going to put the money in the bank, or perhaps buy a new motor car as well," Mrs Smyth said.
Mr Mackay recommended that people sold their shares on the market rather than directly to Prime.
Yesterday's share price was $2.12 on the market, while the price being offered by Prime was $2.15.
"However, the $2.15 offer from Prime is made up of a mixture of cash and the SPARCS bonds," he said.
"Likely valuation of the bonds seems to be somewhere between 90-94c, less than their $1 face-value."
He had been swamped by calls from concerned people.
"People want to know? should they be accepting the offer, doing nothing, or selling their shares on the market."
Powerco chairman Barry Upson, of Wanganui, said Powerco was mailing out its own advice and valuation to shareholders today.
"The board will be meeting [today] and we expect to make a statement then."
Powerco was unable to say whether Prime was near the 90 percent threshold for compulsory acquisition.
"That is something that only Prime knows? but there has been a lot of shares sold," Mr Upson said.
The value of the SPARCS (subordinated prime adjusting rest convertible securities) depends on who you listened to, he said.
"We have had an independent valuation done and that will be in the mail-out."
Shares were issued to Wanganui and Rangitikei residents in 1993, but not all of the 11 or 12 old electricity networks that Powerco now covered had issued shares to the public, he said.
Prime Infrastructure managing director Chris Chapman said with less than two weeks to go until the offer closes he believed they were on track to reaching the 90 percent threshold.
"If that target is reached New Zealand shareholders who haven't accepted the offer will receive all SPARCS ? other than holders of non-marketable parcels."
Sell Powerco shares or you could be out of pocket: expert
AdvertisementAdvertise with NZME.