New bidder for Oaks Hotels & Resorts says board should back its offer

Board members of Oaks Hotels & Resorts, the listed debt-laden apartment-hotel company, have been criticised for continuing to recommend a takeover offer from its majority shareholder Minor International, despite receiving a higher offer – with conditions attached – from another group.

The Singapore-based Edge Equity Investors has offered 60 cents per share for Oaks, but the Oaks board has already thrown its support behind a 52-cents-per-share-offer from Minor.

Bangkok-based Minor now has more than 60% of the company after nabbing a parcel of shares being sold by PricewaterhouseCoopers that were once owned by private companies associated with Oaks founder Brett Pointon.

Oaks told the market on Friday that while Edge’s offer is higher than Minor’s, it is highly conditional, subject to financier due diligence and not an announced takeover offer.

It added that the Edge offer is conditional, with no party acquiring more than 50% of the share in Oaks, which meant that Minor’s purchase of a 34% stake in Oaks from PwC would have to be overruled.

“Given that Minor holds a relevant interest of 60.3% of the shares in Oaks, the Edge proposal is in effect conditional on ASIC’s decision to grant Minor tender offer relief to acquire the 34.4% of share in Oaks held by PricewaterhouseCoopers as receivers and managers of Centrepoint Holdings Pty Ltd and Oaks Apartment Management Pty Ltd, being overturned,” it said.

“The conditional proposal provides that any announced takeover offer would be subject to a number of defeating conditions, including FIRB approval and no material adverse change condition.”

“In consideration of these factors, the Board does not consider the Edge proposal as presented to be a superior offer and maintains its recommendation that Oaks shareholders accept Minor’s offer of 52-cents-per-share, in the absence of a superior offer.”

According to the Australian Financial Review, Edge Equity Investors principal Iqbal Jumabhoy has said its proposal was well considered and had the potential to deliver a superior outcome for Oaks shareholders. Edge is an investment firm which specialises in hospitality assets.

Oaks chairman Doug Wong could not be contacted this morning.

Another takeover offer for Oaks was withdrawn recently. Retail Food Group, which is behind Brumby’s and Donut King, says it gave up on its $95 million bid because there was no certainty the Takeovers Panels would overturn a ruling permitting Minor to nab the 34% stake.

RFG has vowed to look for other opportunities in the retail food franchising.