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Notorious 'low-ball' share offerer back in business, seeking investments

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Bernard Whimp is aiming to be a hedge fund manager, but knows his name will always be linked to what were dubbed ‘low-ball’ offers to buy shares from sometimes naive investors in large NZX companies.

A businessman who gained notoriety for “low-ball” share-buying offers and a series of high-profile legal battles is promoting a new “bargain-hunting” business plan.

Bernard Whimp has been advertising a new hedge fund aimed at finding bargains in the Australian sharemarket. And while he says it is targeted at sophisticated investors, he isn’t shying away from his activities which made him infamous in 2010 and 2011 when he focused on less informed investors.

Then, mail-outs to shareholders in NZX-listed companies including Contact Energy, Fletcher Building and Vector, offered to buy shares at below market prices.

It caused controversy because of claims he was preying on naive investors who did not know the true value of their shares, and he earned angry reactions from the boards of the listed companies whose investors he targeted. He later went to court to try to force deals through from shareholders who said they were misled.

The Financial market Authority (FMA) issued a warning telling investors in 2011: “Offers from Mr Bernard Whimp may not be in your best interests”.

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* Whimp defends ‘low ball’ share offers after backing off lawsuit against Vector
* Bernard Whimp in legal bid to force through rejected ‘low-ball’ offers

The FMA also took Whimp and nine of his companies to court, alleging “deferred payment offers” made to more than 100,000 investors in six major NZX-listed companies for their shares were misleading.

He was banned from making deferred payment offers to shareholders after the High Court in Wellington concluded a major scheme was designed to catch small shareholders “off guard”.

It led to law change designed to make low-ball offers much harder.

His business activities landed him in other legal disputes, including one in 2004 when he removed documents from a Christchurch office that the Official Assignee had taken control of because one of the companies based there had been placed in liquidation.

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Whimp, who worked in the office, claimed that keeping him from the office was unjustified, as there were 40 companies based there, and he returned late in the evening to find it open, retrieving property and documents that belonged to him, and informing the Official Assignee of this.

He was convicted for unlawfully removing records from his office, failing to comply with a notice from a liquidator and burglary.

He was banned from being a director for five years.

Whimp said this week that the $4 million he made from his earlier “audacious” activities provided the capital for him to launch his hedge fund business.

kevin stent/Stuff

Bernard Whimp, who has made a series of low-ball share offers for NZX listed companies, leaves court with his lawyer Nicholas Till, QC, after the Securities Commission was awarded an injunction in 2011 to prevent him taking ownership of any shares through his latest round of offers.

Whimp’s new business, CVI Partners (Chance Voight Investment Partners) is promoting the CVI Financial High Yield Interest Fund, offering interest at 10 per cent per annum through term investments for periods from 12-36 months. Another “master fund” he was promoting was targeting a 20% per annum return but he said that fund was yet to be formed.

He said the CVI Partners Master Fund would be a bargain-hunting fund which he would invest in a small number of companies with shares listed on the ASX sharemarket.

These would be companies he identified as being deeply undervalued, he said.

Whimp said he was aiming at attracting “eligible” investors able to invest in “unregulated offers”.

CVI’s funds would be unregulated offers, he said.

To be an eligible investor, a person must have a high level of investment knowledge and experience in the thing they are seeking to invest in.

The FMA said it was aware of Whimp’s business but could not comment on individuals.

The regulator said investors could certify themselves to be eligible investor’s in relation to a particular transaction, as long as they could find a financial adviser, a qualified statutory accountant, or a lawyer who could confirm they really were experienced, sophisticated investors.

Ryan Pierse/Getty Images

The ASX sharemarket is huge compared to New Zealand’s NZX with over 2000 companies with shares listed on it.

“This is designed to ensure wholesale offers only reach investors who have sufficient previous experience to enable an informed decision,” the FMA said.

Whimp would not provide investment memoranda for the high yield fund to Stuff, saying the company only provided those to the eligible investors.

He said the company was not yet set up to accept money from investors, but expected to be able to do so in around a month.

“We have got some compliance to compete first,” he said.

Whimp believed investors should not be put off by the off-market offers he made in the past.

He saw his off-market share offers as evidence of his audacity, which he said was a “key personality trait” of a hedge fund manager.

“There was nothing illegal about it, other than a run-in with the FMA over the layout of the paperwork on a type of offer called a ‘high-ball”, but there was nothing illegal about it,” Whimp said.

John Kirk-Anderson/Stuff

Bernard Whimp pictured in 2003.