Sun highlights dangers of 25mn share bid

Posted on 16 Jul 2004 at 11:26

Sun has said it is the target of a mini-tender offer by a Canadian company wishing to purchase 25m shares from stockholders.

Sun has not recommended its investors to either take up or refuse the offer, but has pointed out that there are a number of risks associated with a mini-tender.

The company offering the mini-tender, TRC Capital Corporation, is seeking shares less than one per cent of outstanding common stock. This puts the offer below the five per cent threshold that classes it as a tender. As such, TRC is not obliged to offer investors the same amount of detail and security for the offer that SEC rules would impose on a tender for a larger amount.

The SEC warns that mini-tender offers 'have been increasingly used to catch investors off guard,' and that investors 'may end up selling their securities at below-market prices'.

One of the most common problems is that once an investor has decided to sign up to the offer, it is unlikely he or she will be able to renege on that commitment. The party offering the mini-tender however, can extend the closing date of the deal until the market price of the stock rises above the price it had initially offered to by it at.

More information on the dangers of mini tender offers at available at the SEC website.

Author: Matt Whipp

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