Grand Hotel Group is looking to make an alternative proposal to security holders seeking approval to breakup the group’s hotel assets – a move that is likely to upset Mulpha’s $220 million takeover bid.
Yesterday, GHG’s chairman Bill Conn said board has decided to sell the assets for a number of reasons including Mulpha’s offer which does not reflect the underlying value of GHG’s assets and has not been increased.
In addition, he added, whilst the GHG security price has reacted favourably to the information contained in the Targets Statement, including the material increase in earnings and distributions forecast for 2007, and the extensive capital improvement program planned for the Hyatt portfolio over the next three years, the securities continue to trade at a material discount to the NTA of $1.33.
The board also found that no other offers that adequately reflect the underlying value of the group’s portfolio have emerged.
Conn said the proposed resolution would authorise the sale of assets on the condition that the aggregate proceeds realised from the sale process would be at least equivalent to the aggregate of the current book value of assets which are sold.
He added that the orderly sale process was capable of unlocking the underlying value of the group’s assets.
“In the absence of an offer that adequately reflects the underlying value of the assets of the group, the board has unanimously concluded that an orderly sale of the group’s assets is the bet way to facilitate the return of full value to GHG security holders,” Conn said. “By managing the sale process ourselves, GHG security holders are more likely to maximise value, and potentially receive more than the current NTA of $1.33 per security.”
Meanwhile, Conn said since the release of GHG’s Target Statement, the board has received clear feedback from a significant number of investors, including some of the larger institutional security holders that they are strongly in favour of the sale proposal.
At the same time, GHG has not ruled a favourable takeover.
Conn said the board would consider proposals from parties who may wish to make an offer at a price which reflects the underlying value of the group’s assets.
“To the extent that an offer for the entire group emerges whilst the orderly realization process is being conducted, the board will consider the offer and make an appropriate recommendation to security holders,” he concluded.
By Nelson Yap
