The Gresham Hotel group has told a consortium, led by Deloitte corporate finance, either to amend a pre-condition attached to its offer for the Dublin-listed company or to put a higher price on the table.

Gresham yesterday confirmed it had been in discussions with representatives of a consortium offering €1.35 per share for the company, which would value the hotel group at €107 million. However, it said its dominant shareholder, Red Sea, had rejected the approach.

In a statement issued to the Irish Stock Exchange, Gresham said the offer was conditional on receiving at least 80 per cent acceptances from the hotel group's shareholders.

The Gresham board has been talking to the consortium, believed to include three investors with property interests, through Deloitte's corporate finance division since November.

The statement added that the Gresham board had been informed by "a shareholder holding more than 20 per cent" of its shares that it would not be prepared to accept an offer if made at this time. Red Sea owns 28 per cent of the hotel group.

The board said it had requested the consortium's representatives to remove the pre-condition that requires 80 per cent acceptance by Gresham shareholders to allow it to further consider its approach. "Failing this, it should either increase the offer or withdraw the approach," the statement said.

The consortium did not comment on the statement yesterday. It could come back to the board with a higher offer but is likely to be reluctant to alter the 80 per cent acceptance pre-condition.

The bid is being funded by Anglo Irish Bank. If the consortium gets 80 per cent approval, it can purchase the remaining shares, which would secure the bank loan against the group's property assets rather than shares.

The Gresham board could move to appoint a committee of independent directors to consider the offer on behalf of its shareholders.

Red Sea has been coming under pressure to address potential bids for the group. The €1.35 per share offer is a significant premium to Gresham's share price, which closed yesterday at €1.15 in Dublin yesterday. The shares have doubled in value this year as the group has been subject to successive bids.

The company previously rejected a bid of €1.25-€1.30 a share by a consortium believed to have included property developer Mr Paddy Kelly.

Gresham is being advised on the potential sale by AIB Corporate Finance. The Irish group's board is fragmented following Red Sea's hostile acquisition of its controlling stake.

Gresham chairman Mr Harvey Soning is a consultant to Red Sea and it has also appointed Mr Amos Pickel as a director.

Gresham has hotels in Ireland, Britain and Europe. Since Red Sea's arrival, the group has sold hotels in Galway, Limerick and Killarney.

It is thought the Deloitte consortium, if successful, plans to run some of the Gresham hotels, although others may be sold.