Author Topic: A company I own got bought out, but I can't cash out.  (Read 3166 times)

Spekulatius

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A company I own got bought out, but I can't cash out.
« on: February 11, 2020, 04:11:50 PM »
I am currently encountering a situation that I have never ran in before.

I own some shares in obscure french company BCAM.PA which trades on Euronext in France. This is an brewery domiciled in Cameroon, but the shares traded in Paris (or at least used to. These shares are held in an Interactive Brokers account (Roth IRA).

In January, trading in this stock was halted for good and a buyout offer was announced for 128.5Euro (see below)
https://live.euronext.com/en/product/equities/CM0000035113-XPAR#standardRightCompanyPressRelease

I contacted IB on this matter and they told me that they were aware of the tender off and would get back to me, but they never did. After contacting them again, they told me that they do not support this corporate action because of MFIR and MDIR II (I looked it up, it concerns trading in OTC markets) and I would need to transfer my shares to a different broker to get the shares tendered.

The document above details that I can tender my shares for 128.5 Euro in cash until June 3rd. Unfortunately it appears to me that there is no automatic squeeze out and if I do not tender my shares, I keep them either in  register kept by the mother company SABC or in a Cameroon brokerage account  :o. Now the technicalities of having these in a Roth IRA probably wont help and I don't really want to have a brokerage account in Cameroon either.

Now the question is what to do? I will contact IB agains, but knowing how they work, I am pretty sure they tell me just to shove it. Now, is there probably a way to transfer these shares or the entire account somewhere else who can deal with this? Not too many brokerages deal with shares trading in foreign exchanges.  Is what IB is doing actually legal -letting your trade in a secondary market and then not support fundamental corporate actions there? I never ran into this problem before in more than 30 years of investing.


text from the buyout offer:
Quote
At the end of the Cancellation, which will take place following the closing of the Offer:

the holding of SABC shares by a shareholder will be organized according to the applicable Cameroonian regulations, that is to say by the recording of SABC shares in a securities account opened in the name of their owner and kept either by SABC, or by a custody account approved by the Central African Financial Market Supervisory Commission (COSUMAF). SABC will propose to shareholders who have not contributed their shares to the Offer (and who have not decided to sell them within the following three-month period provided for by the Euronext Rules) to register them in the registers of SABC which will be held by it in accordance with Cameroonian law;
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Gregmal

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Re: A company I own got bought out, but I can't cash out.
« Reply #1 on: February 11, 2020, 04:25:42 PM »
Sheesh, ya this is the shit thats been scaring me with a lot of the brokers. They just dont touch anything that is even mildly at risk of being a potential problem for them.

It may not work, but it might be worth contacting IB and requesting that they mail you the physical certificate. Then you can contact the company or its transfer agent and tender your shares via physical certificate and then overnight the certs with obvious tracking and insurance.

Otherwise... you're probably in a tough spot.

LC

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Re: A company I own got bought out, but I can't cash out.
« Reply #2 on: February 11, 2020, 05:15:17 PM »
Either DIY it as Greg said or try to find brokers who WOULD be willing to tender the shares on your behalf. Open an account with them, transfer the shares over and proceed with the tender.

How to find such a broker is the difficult part. If you know of other shareholders you can start there; you can also look into Camaroon brokers and try to find one that also operates in your country or is affiliated somehow with a local broker; it may be easier for them to process all the red tape if it's a related/affiliated company.

Good luck
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Spekulatius

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Re: A company I own got bought out, but I can't cash out.
« Reply #3 on: February 11, 2020, 05:25:24 PM »
So far I have asked IB to reconsider (which I don’t think they are going to do, based on prior experience ) and contacted the company SABC (since the shares would go into company register by default) about what I might do (explaining my situation).

I don’t want to get involved with Cameroon brokers and at this point the shares are still Euronext/french shares anyways. I might do Greg’s DIY route - I think it might be possible to transfer the shares into SABC (mother companies) registrar and get them liquidated for cash there.

Then I still have to deal with the nightmare that this is a distribution from a Roth IRA. Maybe I argue that the shares are worthless  ;)?

If anyone knows a broker that may deal with these foreign share corporate actions let me know.
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LC

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Re: A company I own got bought out, but I can't cash out.
« Reply #4 on: February 11, 2020, 05:36:45 PM »
I wonder if the 60 day rollover rule could apply.
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John Hjorth

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Re: A company I own got bought out, but I can't cash out.
« Reply #5 on: February 11, 2020, 06:31:04 PM »
Christ that sucks, Spekulatius,

As you may be aware of, I own shares in a few French companies, too. This week is winter vacation week in Denmark, so all IRL stuff that I have as work in progress is pretty much standing still right now.

I'll try to make some calls for you, to both my primary broker and my secondary broker. The shares in my largest French position [MC.PA] is at my primary broker, the rest is at my secondary broker. I'll call them both.

It's my experience, that you get better outcomes by dealing with something like this by using the phone than trying to write page up-page down in an e-mail. And it's much easier [read : free] to handle by phone on this side of the Atlantic Ocean related to a French stock [ref. the Forward Pharma A/S situation some time ago].

I've been in some weird situations with stocks and corporate actions at my primary broker a few times, too, and I've never been let down on anything.

- - - o 0 o - - -

To simplify things just a bit, would it be an idea to get the shares "traded out" of the Roth IRA into a taxable account ["substituted" by cash from one of your taxable accounts]? -I mean, you have an "objective"/visible value of the shares [from the tender]. [Internal records/transactions at IB.]
« Last Edit: February 11, 2020, 06:33:03 PM by John Hjorth »
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Spekulatius

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Re: A company I own got bought out, but I can't cash out.
« Reply #6 on: February 11, 2020, 07:41:31 PM »
Christ that sucks, Spekulatius,

As you may be aware of, I own shares in a few French companies, too. This week is winter vacation week in Denmark, so all IRL stuff that I have as work in progress is pretty much standing still right now.

I'll try to make some calls for you, to both my primary broker and my secondary broker. The shares in my largest French position [MC.PA] is at my primary broker, the rest is at my secondary broker. I'll call them both.

It's my experience, that you get better outcomes by dealing with something like this by using the phone than trying to write page up-page down in an e-mail. And it's much easier [read : free] to handle by phone on this side of the Atlantic Ocean related to a French stock [ref. the Forward Pharma A/S situation some time ago].

I've been in some weird situations with stocks and corporate actions at my primary broker a few times, too, and I've never been let down on anything.

- - - o 0 o - - -

To simplify things just a bit, would it be an idea to get the shares "traded out" of the Roth IRA into a taxable account ["substituted" by cash from one of your taxable accounts]? -I mean, you have an "objective"/visible value of the shares [from the tender]. [Internal records/transactions at IB.]

John, thank you for offering your help, but I don’t think there is much you can do, as my situation is unique (as an US investor holding now stranded shares). This wouldn’t be an issue as a French investor for sure, as the whole process was designed to get rid of minority investors to begin with.  I will have to come up with the right way to address the issue, before finding out who to pester on the phone.

As far as trading is concerned, well the shares stopped trading on 1/16 when notice was issued on Euronext all of a sudden, then the tender was announced on 1/21.  Since the trading stop, the shares have never traded and my understanding is that they will never trade again. Again, that is pretty unique as in most cases I have been involved in, shares still kept on trading for a while, which allowed participants to sell their shares and avoid going through the corporate action procedure. In this case, there was no way to do just that.

My own sense is that the mother company SABC wants to get rid of minority investors and will give me a path to do just that. perhaps transfer shares to their company register and then liquidate or something like that. I think there is a way to transfer shares out from my IB account although I have never done that either.
It not a large position (70 shares ~ 9000€) and I actually thought that this strange stock would be bought out eventually, just didn’t think it would end up where I can’t exercise my right to cash in easily.

I will keep posting how this saga develops.
Life is too short for cheap beer and wine.

LC

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Re: A company I own got bought out, but I can't cash out.
« Reply #7 on: February 11, 2020, 07:46:11 PM »
If SBAC cannot help directly, I believe Citi operates in Cameroon.

https://www.citigroup.com/citi/about/countries-and-jurisdictions/cameroon.html

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muscleman

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Re: A company I own got bought out, but I can't cash out.
« Reply #8 on: February 11, 2020, 07:49:51 PM »
I wonder if the 60 day rollover rule could apply.
What do you mean by "60 day rollover rule"?
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muscleman

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Re: A company I own got bought out, but I can't cash out.
« Reply #9 on: February 11, 2020, 07:51:41 PM »
Sorry to hear about your experience Spekulatius. I had a similar issue with a Mangolian mining corp bond that got restructured and after the restructuring, IB stops support for trading. It took me a lot of time to find out that TD AM supports it and I had to transfer the bonds over. It was happy ending but it was really scary at the time.
I wonder if you checked Fidelity? They usually have great foreign stock support, in addition to IB. I think there is a very good chance that Fidelity can do it.
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