The three investors seeking to take over Gresham have tabled an offer of up to €113 million for the hotel group, six months after negotiations on the matter began.
Precinct Investments said yesterday that it would pay €1.30 for each Gresham share if it could secure acceptances in respect of 54 per cent of the company's shares. This would rise to €1.35 if the acceptance rate could be lifted to 80 per cent.
The hotel firm has never traded at this level. Its shares closed last night at €1.28, up one cent.
In a statement to the stock exchange, Precinct said that it had agreed the cash offer with the Gresham board, with the exception of two directors: Mr Harvey Soning and Mr Amos Pickel.
Mr Soning, who acts as Gresham chairman, said he believes the offers undervalue the business and assets of the group. He said the value that Precinct saw in the firm should be "exploited for the benefit of the Gresham shareholders." He had previously given his support to a Precinct approach at the same level.
Mr Pickel, who represents Gresham's 28.3 per cent shareholder, Red Sea, had voluntarily excluded himself from discussions on the Precinct bid.
A spokesman for Red Sea confirmed last night that the hotel group would be rejecting what it considered to be a "flunk" Precinct offer. He accused Precinct of "dithering" over the past six months.
Precinct indicated yesterday that it had already secured irrevocable acceptances of its offer in respect of 6.2 per cent of Gresham shares. This includes the holdings of supportive Gresham directors and staff.
It is believed that the majority of a small number of institutions holding about 15 per cent of Gresham shares have also reacted positively to the Precinct move, although they are not expected to offer irrevocable acceptances.
Gresham has some 8,500 retail shareholders, with only about 1,000 of these owning more than 5,000 shares each. Of these, about 750 have more than 50,000 shares. The maintenance of a scheme whereby these smaller shareholders can stay in Gresham hotels at a discounted rate would been guaranteed until 2007 under Precinct ownership.
Precinct must also take account of a 3.8 per cent holding that has built up by the Discount Bank of Israel over the past week.
This holding, which has attracted the attention of the Takeover Panel, was confirmed by the Discount Bank yesterday.
The bank said it was holding the shares for an entity or individual named Charai Balrau.
It is believed that Charai Balrau is based in Hong Kong. Red Sea has told the Gresham board that it has no connection with the shareholder.
Mr Donal Chambers, senior non-executive director of Gresham said yesterday that the Precinct offers represented "an excellent opportunity for shareholders to realise their investment for cash".
Mr John Joseph (JJ) Murphy, one of Precinct's three shareholders, said the group was looking forward to working with Gresham management and staff to develop and expand the business. The three-man group, which also includes property developer, Mr Bryan Cullen and solicitor, Mr David Coleman, said the implementation of initiatives in the best interests of Gresham would be easier if the company was not subject to the requirements of a listed company.
They indicated that such initiatives might include the formation of "alliances" with branded hotel operators.
The three investors have undertaken to provide personal loans of €15 million to meet the costs of their bid, with the remaining funds to be advanced by Anglo Irish Bank.
