Tourism Holdings Ltd directors will talk to Ballylinch to see if the company will increase its takeover offer, THL chairman Keith Smith says.
However, the directors were recommending a "do not accept" notice on the Ballylinch offer, he said.
THL yesterday released a letter to shareholders in which independent adviser Simmons Corporate Finance said there was "no compelling reason" to accept the current Ballylinch offer.
Ballylinch wants to buy 40.85% of the ordinary and redeemable shares in Tourism Holdings it does not already own at a price of 67.5c per ordinary share.
That would take Ballylinch's ownership of the company's ordinary shares to between 50.01% and 52.2%.
The shares were trading at 70c yesterday.
Simmons put the underlying value of Tourism Holdings ordinary shares in a range between 97c and $1.27.
That was for all the ordinary shares based on the company's current strategic and operational initiatives, and reflected the value of control.
Simmons noted Tourism Holdings' initiatives did not factor in any allowance for shock events to which the tourism industry was highly susceptible.
Some investors might price in a discount to the assessed values to allow for future shock events, Simmons said.
Forsyth Barr broker Peter Young said the offer was "very opportunistic" at 68.5c and was substantially lower than what shareholders would look at. "THL's net tangible assets value [NTA] is $1.30 which just shows how low the offer is. I would doubt shareholders would be forthcoming to accept 68.5c based on valuation of 97c to $1.27"
Earnings for THL need to substantially improve but I can't see this in the near term."
Investors were going to have to be patient, he said.
Hopefully there would be a "sensible bid" coming from Ballylinch or another company coming into the frame, Mr Young said.
Ballylinch, which held 19.1% of Tourism Holdings' ordinary shares, was a limited partnership that had been registered in April and whose sole director was John Grace, a New Zealand citizen who lived in Switzerland and was chairman of Sterling Grace Private Equity.
THL owns and operates motorhome, campervan and car rental businesses in this country and Australia, a recreational vehicle rental business in the United States, a motorhome and campervan manufacturing company in New Zealand, as well as tourism activities and a transportation business in New Zealand.
Mr Smith said THL had approached other parties to test their interest in making a competing takeover offer for the company.
So far, there had been no additional expressions of interest.
If the offer was successful it would give Ballylinch a controlling ownership stake in Tourism Holdings, but as the offer was partial shareholders might not be able to sell all their shares into it and may not receive a control premium on all their shares.
The offer came at a time when Tourism Holdings' performance had been affected by the global financial crisis, persistently high New Zealand and Australian currencies and natural disasters that affected global tourism flows, Mr Smith said.
While Mr Grace had been a long-standing and supportive shareholder of Tourism Holdings, the board was unaware of any further specialist experience or expertise that Ballylinch brought to the company.
However, the directors were recommending a "do not accept" notice on the Ballylinch offer, he said.
THL yesterday released a letter to shareholders in which independent adviser Simmons Corporate Finance said there was "no compelling reason" to accept the current Ballylinch offer.
Ballylinch wants to buy 40.85% of the ordinary and redeemable shares in Tourism Holdings it does not already own at a price of 67.5c per ordinary share.
That would take Ballylinch's ownership of the company's ordinary shares to between 50.01% and 52.2%.
The shares were trading at 70c yesterday.
Simmons put the underlying value of Tourism Holdings ordinary shares in a range between 97c and $1.27.
That was for all the ordinary shares based on the company's current strategic and operational initiatives, and reflected the value of control.
Simmons noted Tourism Holdings' initiatives did not factor in any allowance for shock events to which the tourism industry was highly susceptible.
Some investors might price in a discount to the assessed values to allow for future shock events, Simmons said.
Forsyth Barr broker Peter Young said the offer was "very opportunistic" at 68.5c and was substantially lower than what shareholders would look at. "THL's net tangible assets value [NTA] is $1.30 which just shows how low the offer is. I would doubt shareholders would be forthcoming to accept 68.5c based on valuation of 97c to $1.27"
Earnings for THL need to substantially improve but I can't see this in the near term."
Investors were going to have to be patient, he said.
Hopefully there would be a "sensible bid" coming from Ballylinch or another company coming into the frame, Mr Young said.
Ballylinch, which held 19.1% of Tourism Holdings' ordinary shares, was a limited partnership that had been registered in April and whose sole director was John Grace, a New Zealand citizen who lived in Switzerland and was chairman of Sterling Grace Private Equity.
THL owns and operates motorhome, campervan and car rental businesses in this country and Australia, a recreational vehicle rental business in the United States, a motorhome and campervan manufacturing company in New Zealand, as well as tourism activities and a transportation business in New Zealand.
So far, there had been no additional expressions of interest.
If the offer was successful it would give Ballylinch a controlling ownership stake in Tourism Holdings, but as the offer was partial shareholders might not be able to sell all their shares into it and may not receive a control premium on all their shares.
The offer came at a time when Tourism Holdings' performance had been affected by the global financial crisis, persistently high New Zealand and Australian currencies and natural disasters that affected global tourism flows, Mr Smith said.
While Mr Grace had been a long-standing and supportive shareholder of Tourism Holdings, the board was unaware of any further specialist experience or expertise that Ballylinch brought to the company.