TRC Capitalizations

Today my company sent out a press release saying that a company called TRC Capital has made a “mini-tender” offer to shareholders of our company. TRC wants to purchase our shares for 7.23% under what the stock is trading for publicly. They offer cash and when they make the offer, they always make an offer for under 5% of the company’s value so that they can skirt SEC regulations on disclosure.

Depending on the number of people they can fool, they can make money instantly because they will buy the shares for let’s say $20 and instantly sell it on the open market for $21. So, if they find 2 million investors to fool, they can make $2,000,000 without ever holding the stock and incurring any risk what so ever.

I can’t believe that this can get around SEC regulation, but it really points out that as an investor, you really need to pay attention to what’s going on. I am sure a lot of you know this stuff, but I am going to share what I know.

As many investors know, tender offers are made by investing groups who want to take over a company. They make an offer usually at a premium price, meaning that if your stock trades for $20 then they will offer you $23 in cash for example. They will try to attain a majority stake in the company so they can take it over and then do whatever they want with it.

When a company does this, they are required to disclose information about the investment group so that investors will be aware and competitive bids can also be tendered (offered) to the present shareholders of the company. But, this company TRC Capital makes their offers for under 5% of the company so they don’t have to do it.

It is a legal scam and don’t fall for it, because you are basically giving money away. If you put “TRC Capital” in, you can see how many companies they have done this to.