It’s hard to imagine why any investor would sell shares at discounted prices when they could easily realize better prices on the open market. Yet enough are selling to keep a Phoenix-based firm busy expanding its “mini-tender” business to include a who’s-who of mining companies.
IG Holdings, headed by Phoenix resident Ira Gaines, has offered to buy shares of numerous companies at below market prices in the past six months. Its targets have ranged from ice-cream companies to bus lines, with a favourite being mining companies.
The latest target,
Mini-tenders have been offered for shares of
Other companies have also been targeted, including
The efforts of IG Holdings have spawned copy-cats.
Selkirk, which openly admitted Placer’s shares ranged from US$10 to $11, offered a commission-free transaction to “odd-lot” shareholders, particularly those who own fewer than 100 shares. It suggested net proceeds from the proposed sale “may be greater than from a sale through the New York Stock Exchange,” where Placer lists in the U.S.
Mining companies are cautioning their shareholders not to tender to the offers. The high number of mining companies targeted appears to be partly a reflection of investors’ dissatisfaction with how the sector has been performing.
Mini-tender offers involved a small amount of shares — usually less than 4.9% of the outstanding shares, but typically 1%. At such a small amount, those who make the tenders are exempted from the reporting requirements of the U.S. Securities and Exchange Commission (SEC).
However, the SEC has been closely monitoring the growing popularity of mini-tenders and is considering guidelines aimed at discouraging the process. In the meantime, mini-tenders remain a case of caveat vendor: let the seller beware!
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