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Anybody got any experience of share tenders.

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  • 02-06-2020 11:14am
    #1
    timetogo1
    Registered Users Posts: 847 ✭✭✭


    I've got some shares with Degiro for Spark Energy. SPKEP.
    I got an email today saying that they have a Corporate Action where Spark Energy has an upcoming exchange offer.

    I have two options.

    You can opt to tender your shares at 18 USD for every 1 share tendered.
    You can take no further action (default option).

    Their current price is $21.68.

    Does tender just mean that I'm selling them to the company for $18 a share? When they originally brought out the tender announcement (May 11th) the price was €19 a share.

    So I'm confused. If it means I'm just selling to the company for $18 why would I do that if I can just sell them on Degiro for $21.68.
    I'm planning on taking option b (take no further action) but is there an negative consequence to doing that.


Comments

  • Options
    #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    timetogo1 wrote: »
    I
    So I'm confused. If it means I'm just selling to the company for $18 why would I do that if I can just sell them on Degiro for $21.68.
    I'm planning on taking option b (take no further action) but is there an negative consequence to doing that.

    What was the price at the time the tender was made? And is the offer only for cash or are there extras?

    Has something significant in the company to push the price up? Normally tender prices are pitched at an attractive level... on the face of it now, that seems not to be the case.


  • Options
    #3
    Kilboor
    Registered Users Posts: 1,224 ✭✭✭Kilboor


    I've had a look at this company. There is a strange dual listing happening for them and both are on Nasdaq.

    You have SPKE Nasdaq which currently trades for 8 dollars a share and then SPKEP Nasdaq which is what you have mentioned and is trading at 21 dollars a share.

    Are you sure that the tender is not based on SPKE as opposed to SPKEP?


  • Options
    #4
    chrisd2019
    Registered Users Posts: 432 ✭✭chrisd2019


    timetogo1 wrote: »
    I've got some shares with Degiro for Spark Energy. SPKEP.
    I got an email today saying that they have a Corporate Action where Spark Energy has an upcoming exchange offer.

    I have two options.

    You can opt to tender your shares at 18 USD for every 1 share tendered.
    You can take no further action (default option).

    Their current price is $21.68.

    Does tender just mean that I'm selling them to the company for $18 a share? When they originally brought out the tender announcement (May 11th) the price was €19 a share.

    So I'm confused. If it means I'm just selling to the company for $18 why would I do that if I can just sell them on Degiro for $21.68.
    I'm planning on taking option b (take no further action) but is there an negative consequence to doing that.

    Tender price is equivalent to a fixed price sale.
    You may need to read the tender document though to check for any terms and conditions, such as the maximum number of shares they want to buy and how and when they would pay you.


  • Options
    #5
    timetogo1
    Registered Users Posts: 847 ✭✭✭timetogo1


    For the questions above.
    Yeah it's SPKEP and the price of the tender is $18 a share.

    I was confused at the date of the tender announcement the price was about $19 a share and it's about $21 now. So I thought I was missing something. Maybe they expected the price to go down over the last month.


  • Options
    #6
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    Kilboor wrote: »
    I've had a look at this company. There is a strange dual listing happening for them and both are on Nasdaq.

    One is common stock the other is preferred, nothing unusual about that.
    timetogo1 wrote: »
    For the questions above.
    Yeah it's SPKEP and the price of the tender is $18 a share.

    I was confused at the date of the tender announcement the price was about $19 a share and it's about $21 now. So I thought I was missing something. Maybe they expected the price to go down over the last month.

    I don't follow this stock nor do follow the industry, so hopefully someone with the knowledge will comment on it.

    It is certainly a strange situation on the face of it, I can see why it would be very beneficial for the company to do it at $18, but not from the holder's point of view. It is basically a good corporate bond - the company is well financed and the yield is about 9%, so why would anyone want to dispose of it and why would any company expect that there be an uptake on such an offer.


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  • Options
    #7
    Kilboor
    Registered Users Posts: 1,224 ✭✭✭Kilboor


    Jim2007 wrote: »
    One is common stock the other is preferred, nothing unusual about that.


    Thanks Jim not too familiar with this. More reading for tonight


  • Options
    #8
    Shedite27
    Registered Users Posts: 9,364 ✭✭✭Shedite27


    I'm not sure of the situation, I'm going through one myself too at the moment where the tender price is $10 compare to $31 market price! Having ready up on it, it sounds like my situation is really a bit of a reverse-merger, and they're intending that nobody will take up the offer. My company is being bought by another company, but really they just want all Vectoiq shareholders to become shareholders of the new company.

    I was reding up on it when it happened tho, and sounds like some situations are a bit more shady. They're trying to
    1. Catch some lazy investors offguard. Believe it or not, some people will sell at the tender price without checking.
    2. Create a sense that the company is "only" worth $18 a share. This can reduce the market price organically, possibly below $18, so it's a bit of a self-fulfilling prophecy.


  • Options
    #9
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    Shedite27 wrote: »
    They're trying to
    1. Catch some lazy investors offguard. Believe it or not, some people will sell at the tender price without checking.
    2. Create a sense that the company is "only" worth $18 a share. This can reduce the market price organically, possibly below $18, so it's a bit of a self-fulfilling prophecy.

    We're talking about preferential shares with a return of around 9% - 10%, redeemable in two years time... and the common stock is trading at around $8 to $9, so no.


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