Shares in Gresham Hotel Group jumped by 16 per cent yesterday as it emerged that the consortium led by Deloitte Corporate Finance had made a revised approach to the board. Una McCaffrey reports.
The consortium has told Gresham it is prepared to proceed with an offer that is not conditional on the approval of 80 per cent of shareholders.
This 80-per-cent condition was the main sticking point of the consortium's previous approach, with the unwillingness of 28-per-cent Gresham shareholder Red Sea to accept the €1.35 offer automatically dooming it to failure.
Acceptance from 80 per cent of Gresham shareholders would have allowed the consortium to compulsorily acquire the rest of the company.
Its banker, Anglo Irish Bank, would then have been able to secure its loan against property assets rather than shares.
It is understood that the new approach, if successful, would see the consortium building up as large a holding in Gresham as possible without buying Red Sea's stake and then placing these shares under the ownership of a holding company.
Under Takeover Panel rules, the consortium would have to gain control of at least 50 per cent of the firm before its offer could be declared unconditional. It was unclear yesterday whether or not the consortium itself had set a higher level of acceptances within its latest approach.
This new strategy, which would still see shareholders being paid €1.35 per share, has come as a surprise to observers since it appears to eliminate Anglo Irish's ability to secure its loan against property. It is reasonable to presume that such an arrangement would come at a higher cost to the consortium.
It also indicates that the would-be bidders are extremely determined to gain control of Gresham, since success would almost certainly involve direct confrontation with Red Sea, which has until now been the company's dominant shareholder.
Red Sea made no comment yesterday but Gresham chief executive Mr Patrick Coyle acknowledged that such a situation would be "less than ideal".
He said the hotel group's board, which is known to be fragmented, would meet to discuss the new approach early next week.
"There's a long way between now and recommendations to shareholders," said Mr Coyle.
The consortium, which comprises three investors with property interests, detailed its amended proposal in a letter to Gresham's board on Thursday evening, a day before a deadline set by the Takeover Panel on the matter was due to expire.
It is believed that Thursday's letter was the first communication between the consortium and Gresham's board since the company asked the group either to amend or abandon its approach just before Christmas.
The Takeover Panel has now extended its deadline for two weeks until Friday, January 30th, to allow Gresham to consider the fresh approach.
The consortium, which is being advised by Deloitte Corporate Finance, did not comment.
Gresham shares closed at €1.22, up 17 cents on the day.
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