Opinion/Bill Murdoch: Next week could be the beginning of the end for Gresham Hotel Group as a publicly-quoted group. But should this be lamented or celebrated?

Any investor hoping to be briefed by the group's website will be badly let down. Indeed, not even the basic rudimentary information is provided. It does, of course, give information to potential hotel guests. But if you are an investor, forget it.

Go to the "latest news" and you get a cryptic one sentence dated April 2nd saying Gresham Hotel Group plc today announced preliminary results for the year ended December 31st, 2003. Fine, but where are these results? Incredibly, nowhere.

Then click on the latest news archive. The first on the list is dated August - eight months ago - announcing the publication of interim results. Again, no figures.

The public relations advisers and head office staff provide information with alacrity but any publicly-quoted company should provide the latest relevant information on its website. This should include all news items, all the financial returns, including balance sheets, dividend record and share price record.

So Gresham is not investor- friendly. And looking at its long, mostly tedious, financial record, it could be argued that it is intentionally burying its head.

There has, however, been some recent movement from its moribund state. The sale of the Killarney, Limerick and Galway Ryan hotels, which were very dependent on the leisure market, made good commercial sense.

But where is the group now? And more importantly, where, in the absence of an achievable bid, is it going?

We now have an unacceptable position. The bidding consortium, with its indicative offer of €1.30 per share, has, under its due diligence programme, been given detailed information about the company that is not available to the ordinary shareholders. So we have the totally inequitable situation where the bidders have up-to-date financial information about the company that is denied to the outside shareholders.

Should a bidding company have superior knowledge to the shareholders who have to decide on the merits of the bid? Definitely not. But then what are the so-called regulatory organisations doing about it? Nothing.

All these shareholders have to work on are the preliminary results for 2003 (the annual report is not scheduled for publication until June). The €1.30 offer is a little illusory. Why? Because no dividends are being declared at the request of the bidders. Gresham could easily have declared a 1.5 cent dividend.

This omission brings the suggested offer down to €1.285 , which is at a 34.5 cent discount to the net assets value per share of 163 cent and a 24 multiple of the operating profit. Taking tax into account and based on the net assets, the offer appears fair enough.

Also, the historic operating profit multiple appears reasonable, although with the sale of the three hotels, a gearing of just 27 per cent, €13.9 million cash in its balance sheet (this must be better now), it has not yet been tested.

And the €1.285 looks good against the share price record over the past few years, with the range down as low as 60 cent. Clearly with the absence of an offer, the share price would fall back again.

The acquisitive group - advised by Deloitte & Touche and consisting of Jackson Homes property developer Mr Brian Cullen, Dublin solicitor Mr David Coleman and builder Mr JJ Murphy - has been toing and froing and it has to be asked whether it has a defined strategy. The initial suggestion was an offer of €1.45 per share and this was reduced to €1.35 (conditional on 80 per cent acceptances).

When this was turned down by Red Sea, the Israeli group which controls 28 per cent of Gresham, the acquiring group revised its offer down to €1.30 per share, conditional on 54 per cent acceptances but to be raised to €1.35 if acceptances reached 80 per cent.

This latter move was a high-risk strategy but a clever move. High-risk because the acquiring group cannot use Gresham assets as security for a bid (it could under the normal 80 per cent conditionality). But it is clever because it could force Red Sea into a minority position in an unlisted company.

The consortium interested in Gresham has not indicated its intentions. But following the sale of three hotels, the group is now left with seven properties. The most important are the Dublin, Cork and London hotels. Regrettably, it does not own the Royal Marine in Dún Laoghaire with its valuable four-acre site - this is leased.

The seven-member board of the Gresham is now waiting for next week's promised formal offer. Providing the consortium does not change its mind again, it is understood that the majority is warm to the approach.

Mr Amos Pickel, who represents Red Sea, can hardly accept €1.30 having turned down €1.35. Mr Harvey Soning might also side with Red Sea.

On balance, the suggested price is reasonable. And with a valuation of just over €100 million, Gresham is far too small to be considered a serious publicly-quoted player.

bmurdoch@irish-times.ie