Tuan Sing bids A$285 mln for Australia's Grand Hotel

MELBOURNE, Nov 2 (Reuters) Singapore's Tuan Sing Holdings Ltd. has made a cash offer for Australian hotel owner Grand Hotel Group that values it at A$285 million ($221 million), aiming to stop what it sees as a potentially cheap sale of GHG's assets.

Tuan Sing, which already has 25 percent of Grand Hotel (GHG), said the bid offered greater certainty to shareholders than GHG's plan to sell its hotels after its rejection of a A$220 million offer from Malaysian group Mulpha International Bhd. .

Tuan Sing highlighted pressures under GHG's break-up plan, including tax, timing and fee issues, that might cut the sale proceeds.

''Having regard to these issues, we believe that our offer provides an alternative which is superior and reflects fair and certain value for existing GHG security holders,'' Tuan Sing said.

The Singapore group said GHG's shares had traded below net book value for most of the past nine years and trading in the shares had been thin.

''TSA believes that an alternative to the stapled securities structure of GHG would be more suitable for operating a hotel business and that GHG should be privatised,'' it said in a statement to Singapore's stock exchange.

GHG advised its shareholders to take no action on the Tuan Sing offer while directors reviewed it.

It said that since it announced its break-up plan on Oct.

23 it had received a number of approaches from parties interested in buying either GHG or its hotel portfolio.

BELOW SHARE PRICE Tuan Sing, which has a stock market capitalisation of about US$110 million, said it would offer A$1.10 a share, which was 29 percent more than Mulpha's offer of 85 cents a share, but still below GHG's last trading price of A$1.25.

Tuan Sing, controlled by the family of Indonesian tycoon Sjamsul Nursalim, has residential, commercial and hotel properties in Singapore, China, and Australia, and industrial interests ranging from tyre and auto products to energy and engineering services.

GHG was going to seek shareholder approval on Nov. 28 for a plan to sell its four Hyatt hotels, two Chifley hotels and one Country Comfort hotel in Australia, aiming to fetch more than their current net tangible asset value of A$1.33 a share.

A condition of the Tuan Sing bid is that GHG shareholders do not vote to approve the sale of the company's assets.

GHG said it had not received a proposal yet from any parties that had expressed interest in the whole group or its hotels and there was no certainty that a binding offer would be made.

''There is however a due diligence process which has been established to enable these parties to develop their interest in GHG,'' GHG said.

Tuan Sing said a single institution had accounted for most of the activity in GHG's shares since late September and recent buying did not indicate a balanced market in GHG's shares.

Mulpha this week said it would not extend or increase its offer, which is due to close on Nov. 7, and a spokesman reiterated that statement on Thursday.

Babcock & Brown Ltd. owns just under 15 percent of GHG. It had agreed to sell that stake to Mulpha if Mulpha obtained more than 50 percent of GHG's shares.

REUTERS DKS DS1236