CSG Systems International Inc., the Denver-based billing
and customer-management vendor, received an unsolicited offer from a group of Phoenix
investors aiming to buy up to 1 percent of the company's shares at a 27 percent discount.
CSG immediately advised its shareholders to disregard
Peachtree Partners' offer, pointing out that if they wished to sell their shares, they
could get a better price on the open market.
Peachtree made the offer June 16, requesting to buy CSG
shares for $20.50 each. At the time, CSG shares were trading at $28.19. Peachtree said the
tender offer will expire July 28.
The Peachtree offer is called a "mini-tender,"
whereby investor groups hope to make a quick profit by luring shareholders in targeted
companies to give up their stock at below market value, then selling the shares at the
Companies that launch mini-tender offerings are also able
to avoid Securities and Exchange Commission reporting requirements because they try to buy
less than 5 percent of the targeted company's outstanding stock. As a result, shareholders
do not receive detailed information regarding the buyout offering.
This is not the first company Peachtree has targeted with a
mini-tender. According to published reports, the investor group has made similar
below-market offers for Friendly Ice Cream Corp., Chicago-based catalog retailer Spiegel
Publishing Co. and two Canadian mining and metals companies. It could not be determined
how successful those offers were.
CSG vice president and general counsel Joe Ruble said he
did not know whether any shareholders tendered their shares, but he hoped none did.
The SEC has set up a link on its Web site (www.sec.gov/consumer/keyword/tminiten.html)
explaining mini-tender offers and recommending that shareholders in any company thoroughly
investigate any offer for their shares.
Ruble said CSG sent a letter to the SEC "expressing
the company's outrage" concerning Peachtree's tender offer, and staff members of the
regulatory agency indicated that they are considering drafting a rule that would put an
end to mini-tenders.
"[Peachtree is] exploiting a loophole," Ruble
said. "I'm not saying they are doing anything illegal, but they are exploiting the
current drafting of the law."
Ruble added that because Peachtree is only going after
"up to 1 percent" of CSG's shares, it is obvious that the main intention of the
tender offer is to turn a quick profit on the backs of unwitting shareholders.
"They have no intention of doing anything except
bamboozling shareholders," he said.