Holding these for shareholder discount and the belief that someone will come along with a plan on what to do with them .....

Now could be the right time to get in for a ride northwards with little downside risk


ains


Thread started at 95p mid - currently at a high of 129p - up 35.79%








Investec Securities took the stock off its "sell" list citing among other factors the potential for "corporate action".


Banks call in Ernst & Young to check out Thistle Hotels
By Lauren Mills and Damian Reece (Filed: 02/02/2003)


Thistle Hotels' bankers, led by the Royal Bank of Scotland, have hired Ernst & Young to carry out a review of the business which could lead to sweeping management changes and disposals at the hotels group.

Although Thistle has around 320m in the bank, the banks are thought to be alarmed at the group's precarious trading position. They are also said to be questioning the ability of the management to steer the company through a period of uncertainty in the market.

In January, Thistle revealed a 10.5 per cent drop in average room rates in London last year. It also refused to give details of how it planned to spend the cash raised through the disposal of 31 regional hotels to Orb Estates last March for 600m. As part of the deal, Thistle retained management contracts to run the hotels.

The group also admitted it would be difficult to forecast turnover for 2003 because it remained "cautious as to when there will be a recovery in general hotel trading conditions".

Ernst & Young is expected to report back to the banks on the company's overall financial strength within the next two weeks. E&Y is likely to focus on current trading, as well as prospects for improving performance in a relentlessly difficult market.

The accountancy firm will also advise the banks on a range of strategic options including further disposals.

Thistle's shares rallied 9p to 98p at the end of last week after Investec Securities cited "corporate activity" as a reason for taking the stock off its "sell" list.

Ian Burke, the chief executive, is under mounting pressure to clarify whether he plans to return the cash to shareholders or spend it on acquisitions.

His indecision is causing friction among Thistle's leading institutional shareholders who hold differing views about what should be done with the cash.

The two biggest shareholders, each of which has a seat on the board, are BIL International, which owns 45.8 per cent, and the Government of Singapore which has a 13.1 per cent stake.

Other large investors include Havelock Investments and Tweedy Brown Company.

A spokesman for the company insisted it knew nothing of E&Y's review. He also confirmed that Burke would update the City with a strategic plan for the group when it announces its year-end results in early March.

03/04 12:29
BIL, Thistle Hotels' Biggest Investor, Bids for Rest (Update3)
By Gabrielle Monaghan


London, March 4 (Bloomberg) -- BIL International Ltd., the biggest Thistle Hotels Plc shareholder, offered to buy the rest of the U.K. hotels operator in a bid that values the company at 554.7 million pounds ($875 million). Thistle rejected the bid.

Singapore-based BIL, owner of 46 percent of Thistle, offered 115 pence a share in cash, it said in a Regulatory News Service statement, or 4.2 percent less than yesterday's closing price. The stock rose to 120 pence.

``This looks like a cheeky bid,'' said Colin Morton, who helps manage 300 million pounds at BWD Rensburg Ltd. and sold his Thistle shares after they rose to 130p. ``It's not particularly generous since the net asset value is close to 2 pounds.''

Thistle and rivals with luxury rooms in city centers have suffered more than cheaper hotels as sluggish economic growth deters corporate and long-haul travel. The company, which runs 24 central-London hotels, including The Royal Horseguards, yesterday posted a 42 percent decline in full-year profit.

Shares of Leeds, northern England-based Thistle added 1.7 percent at 12:15 p.m., bringing this year's gain to 9.5 percent.

`Disappointing' Offer

The offer gives shareholders ``an opportunity to realize in cash their investment in Thistle whilst removing the risk and uncertainty in connection with the current challenges facing Thistle and the U.K. and global hospitality markets in general,'' BIL Chief Executive Officer Arun Amarsi said in the statement.

``The offer looks disappointing,'' said Mark Abramson, an analyst at Bear Stearns who has a ``peer perform'' rating on the stock. ``This offer doesn't come near what we estimate the underlying net asset value to be.''

Thistle said yesterday it will decide whether to return cash to shareholders once the bid approach from BIL was concluded.

It's been urged by analysts to buy back shares after raising 600 million pounds last year through the sale of 27 hotels, including the Thistle Kensington Palace, to Orb Estates Plc. The hotelier was the subject of a takeover pursuit in November by Orb, a U.K. real-estate company.

BIL's offer is ``opportunistic and totally fails to recognize the underlying value of Thistle,'' the hotelier said in a Regulatory News Service statement.

12:31pm (UK)
Thistle Rejects Bid from Shareholder

By Ben Griffiths, City Staff, PA News


The Singapore-based investment firm circling Thistle Hotels today tabled a cash bid valuing the upmarket hotel chain at 555 million.

BIL International, which already owns 46% of Thistle, is bidding 115p per share for the remaining stake it does not already own.

Thistle immediately rejected the approach, calling it opportunistic and claiming the offer failed to recognise the underlying value of the company.

Thistle is Londons biggest hotel operator with 24 of its 56 hotels in the capital, including the famous Royal Horseguards and the Thistle Tower.

Shares in Thistle, which also operates hotels in major cities including Edinburgh, Newcastle and Birmingham, have risen in recent days as City traders looked to cash in on the bid rumours.

The shares gained 2p to 120p by lunchtime today.

Reporting annual results yesterday, Thistle warned there had been no perceptible improvement in trading after seeing profits fall in 2002.

BIL International said the offer price represented a premium of around 15% to the closing middle market price of 100p per share on February 20, the last business day before the announcement that it was contemplating a bid.

Chief executive Arun Amarsi said: We believe that our offer represents an attractive price for Thistle shareholders and provides them with the opportunity to realise in cash their investment in Thistle whilst removing the risk and uncertainty in connection with the current challenges facing Thistle.

LONDON (SHARECAST) - A bid for Thistle Hotels by its biggest shareholder Brierley Investments as has been dismissed as opportunistic by the board of the hotel group.

BIL's bid, which has been widely expected since its approached the Thistle board just over a week ago, is worth 115p per share and values the company as a whole at 555m. It said if possible it wants the agreement of the Thistle board. Singapore-based BIL already owns 46% of Thistle.

Urging shareholders to take no action, Thistle's board said "It notes that BIL intends to retain the proposed final dividend of 3.4p per Thistle share announced yesterday. The Board strongly believes that this offer is opportunistic and totally fails to recognise the underlying value of Thistle."

Yesterday, Thistle posted a pre-tax profit for the year of 27.9m, compared to 49.1m the previous year. However, the group said that revenue for the first eight weeks of the year in its 18 owned or leased hotels is 1% ahead of the same period in 2002.

04 Mar 2003 13:54 GMT

Thistle Hotels spurns bid from biggest investor

By Mark Potter
LONDON (Reuters) - Thistle Hotels has spurned a 554.7 million pound bid from its biggest shareholder, claiming Singapore investment firm BIL International is trying to buy it on the cheap.

BIL BRY.SI , which is controlled by Malaysian tycoon Quek Leng Chan and owns 45.8 percent of Thistle, said its 115-pence-per-share cash bid was the best way for investors to exit a company battered by struggling hotel markets and facing more turmoil from the global economic downturn and fears of war.

Analysts and investors said BIL's bid was pitched well below the value of Thistle's assets, which include London's The Royal Horseguards and Thistle Tower hotels. But with such a large stake in Thistle, BIL was in a strong position to push a deal through and there were few signs of rival bidders, they added.

"I can't see many hotel groups looking to increase their exposure in London right now," said David Liston, a fund manager at Gerrard Ltd.

At 1325 GMT, shares in Thistle THO.L , which is London's biggest hotelier, were 2.1 percent higher at 120-1/2p.

Hotels groups across the world are struggling with faltering consumer spending and a drop in international travel, triggering a flurry of speculation about mergers and acquisitions.

Pubs and restaurants entrepreneur Hugh Osmond tabled a 5.6 billion pound bid on Monday for Britain's Six Continents Plc SXC.L , the world's biggest international hotel group.

But Thistle has suffered more than most, as 16 of its 18 owned or leased hotels are in London, which is particularly vulnerable to the drop in international and business travel.

The firm reported a 6.8 percent drop in turnover for 2002 on Monday and said its shares were trading well below its net asset value of 211p per share.

"BIL's bid is a big discount to NAV (net asset value)," said Gerrard's Liston. He said he thought an offer of around 140p per share would be more acceptable to shareholders.

CASH PILE

"The board strongly believes that this offer is opportunistic and totally fails to recognise the underlying value of Thistle," the British firm said in a statement.

But BIL, which floated Thistle at 170p in 1996, said the offer was the best way for shareholders to avoid a further downturn in the hotel sector.

"Our offer represents an attractive price for Thistle shareholders and provides them with the opportunity to realise in cash their investment in Thistle whilst removing the risk and uncertainty in connection with the current challenges facing... hospitality markets," BIL Chief Executive Arun Amarsi said in a statement.

BIL's offer is a 15 percent premium to the closing price of Thistle shares on February 20, the day before the Singapore firm said it was considering a bid.

BIL, which was founded in 1961 as Brierley Investments Ltd in New Zealand, needs over 50 percent of Thistle's share capital to gain control of the company, over 75 percent to de-list it and over 90 percent to force minority holders to sell.

The Singapore government owns about 20 percent of Thistle.

Jersey-based investor Orb Estates scrapped plans to bid for Thistle in January, and analysts thought it was unlikely to renew its suit as it battles with its own financial challenges.

Orb was not immediately available to comment.

Thistle agreed last April to sell, but retain management control of, 37 hotels to Orb for 598.6 million pounds.

Thistle has been under pressure to return some of the cash from this deal to shareholders, and analysts said the firm might do this in order to persuade investors to reject BIL's bid.

This is more like it in terms of a defence ...... could have written it myself. I think they will have to pay the money out.


ains


THISTLE HOTELS PLC ('THISTLE')
REJECTION OF BIL INTERNATIONAL LIMITED'S ('BIL') OFFER

Further to the announcement earlier today by BIL of an unsolicited cash offer to
be made by BIL (UK) Limited for the whole of the issued and to be issued
ordinary share capital of Thistle which it does not already own and Thistle's
subsequent rejection of that proposal, the Board of Thistle*, having consulted
with its advisers, wishes to set out in more detail the basis for its unanimous
rejection of BIL's offer.

Prior to its announcement today, BIL had conveyed its offer to the Board of
Thistle* and the Board informed BIL that it would reject an offer at this level
as being wholly inadequate.

The Board of Thistle* considers that:


BIL's offer is opportunistically timed to coincide with a cyclical
downturn in the hotel industry, as well as taking advantage of the current
uncertain geo-political environment;

As announced in Thistle's Preliminary Results yesterday, the Board
believes that Thistle shareholders are well placed to participate in any
upturn in the hotel cycle through Thistle's owned and leased London hotels,
particularly in light of Thistle's operational leverage;

BIL's offer of 115 pence per Thistle share is wholly inadequate,
representing:

only a 4 per cent. premium to Thistle's three month average share price of
approximately 110.5 pence, based on the period up to 20 February 2003, being
the last business day prior to BIL's announcement regarding a possible offer
for Thistle; and

an 8 per cent. discount to Thistle's 12 month average share price of
approximately 125.6 pence, based on the period up to 20 February 2003, being
the last business day prior to BIL's announcement regarding a possible offer
for Thistle.

BIL's offer shows that it intends to retain the final dividend proposed by
Thistle's Board of 3.4 pence per share. This dividend is in respect of
profits earned in the last financial year and shareholders are therefore
being offered only an additional 111.6 pence per Thistle share;

The cash on Thistle's balance sheet as at 29 December 2002 of 367 million
equates to approximately 76 pence per Thistle share. BIL is offering,
therefore, only 39 pence per share for Thistle's hotel businesses:

excluding this cash on Thistle's balance sheet as at 29 December 2002, the
net asset value of Thistle is equivalent to 135 pence per share. 39 pence
per share is a 71 per cent. discount to this; and

the views of BIL were highly influential in the decision to retain this
cash within the Company. This policy will be reviewed by the Board of
Thistle* in light of the offer received today.

The Board of Thistle* will provide detailed guidance following the posting
of the offer document by BIL. In the meantime, Thistle shareholders are
strongly urged to take no action in relation to their holdings of Thistle
shares.

David Newbigging, Chairman of Thistle, said:

'This offer is opportunistic and at a wholly inadequate premium. It totally
fails to recognise the underlying value of Thistle and the Board of Thistle* has
no hesitation in rejecting it. We are reviewing the options to maximise value
for all of Thistle shareholders.'



Enquiries:
Thistle Hotels Plc Telephone: 020 7895 2304
Ian Burke, Chief Executive Officer

Merrill Lynch International Telephone: 020 7995 2000
Simon Mackenzie-Smith, Managing Director
Richard Nourse, Managing Director

Deutsche Bank Telephone: 020 7545 8000
Charles Wilkinson, Managing Director, Corporate Broking

Hogarth Partnership Limited Telephone: 020 7357 9477
Nick Denton
Chelsea Hayes

Sources and Bases:

Average share price information has been sourced from Datastream.

Net asset value calculations per share are based on net assets of 1,016.1
million and cash of 367 million as at 29 December 2002 sourced from Thistle's
Preliminary Results announcement dated 3 March 2003 and 482.4 million shares in
issue.

* The Board of Thistle for these purposes comprises all of the directors of
Thistle, other than Tan Sri Quek Leng Chan and Mr Arun Amarsi, who in view of
their positions as Chairman and CEO, respectively, of BIL have not participated
in the deliberations of the Thistle board in relation to BIL's offer.

Merrill Lynch International and Deutsche Bank AG are acting for Thistle Hotels
plc and for no-one else in connection with BIL's offer for Thistle Hotels plc
and will not be responsible to anyone other than Thistle Hotels plc for
providing the protections afforded to clients of Merrill Lynch International or
Deutsche Bank AG or for providing advice in relation to such offer.

END

04 Mar 2003 18:42 GMT

UPDATE 3-Thistle spurns bid from biggest investor

(Adds Thistle chairman quote and details in paragraphs 5-9)
By Mark Potter

LONDON, March 4 (Reuters) - Britain's Thistle Hotels spurned a 554.7 million pound ($876 million) bid from its biggest shareholder on Tuesday, claiming Singapore investment firm BIL International BRY.SI was trying to buy it on the cheap.

BIL, which is controlled by Malaysian tycoon Quek Leng Chan and owns 45.8 percent of Thistle, said its 115-pence-per-share cash bid was the best way for investors to exit a company battered by struggling hotel markets and facing more turmoil from the global economic downturn and fears of war.

Analysts and investors said BIL's bid was pitched well below the value of Thistle's assets, which include London's The Royal Horseguards and Thistle Tower hotels. But with such a large stake in Thistle, BIL was in a strong position to push a deal through and there were few signs of rival bidders, they added.

"I can't see many hotel groups looking to increase their exposure in London right now," said David Liston, a fund manager at Gerrard Ltd.

Shares in Thistle closed up 3.4 percent at 122 pence after London's biggest hotelier rejected the offer.

"This offer is opportunistic and at a wholly inadequate premium," Chairman David Newbigging said in a statement.

"It totally fails to recognise the underlying value of Thistle and the board of Thistle has no hesitation in rejecting it. We are reviewing the options to maximise value for all Thistle shareholders," the Thistle chairman added.

One option under consideration by Thistle's banking adviser Merrill Lynch will be the return of the group's cash pile of 367 million pounds to shareholders, which BIL has opposed in the run up to the bid, industry sources said.

BIL is being advised by HSBC.

Hotels groups across the world are struggling with faltering consumer spending and a drop in international travel, triggering a flurry of speculation about mergers and acquisitions.

Pubs and restaurants entrepreneur Hugh Osmond tabled a 5.6 billion pound bid on Monday for Britain's Six Continents Plc SXC.L , the world's biggest international hotel group.


SUFFERING MORE THAN MOST

But Thistle has suffered more than most, as 16 of its 18 owned or leased hotels are in London, which is particularly vulnerable to the drop in international and business travel.

The firm reported a 6.8 percent drop in turnover for 2002 on Monday and said its shares were trading well below its net asset value of 211p per share.

"BIL's bid is a big discount to NAV (net asset value)," said Gerrard's Liston. He said he thought an offer of around 140p per share would be more acceptable to shareholders.

BIL said the offer was the best way for shareholders to avoid a further downturn in the hotel sector although it floated Thistle at the higher price of 170p in 1996.

"Our offer represents an attractive price for Thistle shareholders and provides them with the opportunity to realise in cash their investment in Thistle whilst removing the risk and uncertainty in connection with the current challenges facing... hospitality markets," BIL Chief Executive Arun Amarsi said in a statement.

BIL's offer is a 15 percent premium to the closing price of Thistle shares on February 20, the day before the Singapore firm said it was considering a bid.

BIL, which was founded in 1961 as Brierley Investments Ltd in New Zealand, needs over 50 percent of Thistle's share capital to gain control of the company, over 75 percent to de-list it and over 90 percent to force minority holders to sell.

The Singapore government owns about 20 percent of Thistle.

Jersey-based investor Orb Estates scrapped plans to bid for Thistle in January, and analysts thought it was unlikely to renew its suit as it battles with its own financial challenges.

Orb was not immediately available to comment.

Thistle agreed last April to sell, but retain management control of, 37 hotels to Orb for 598.6 million pounds, and Thistle has been under pressure to return some of the cash from this deal to shareholders.

After Six Continents, now Thistle Hotels gets a hostile takeover bid too
By Susie Mesure Indy tomorrow
05 March 2003


Thistle Hotels has rejected a 555m takeover bid from its biggest shareholder, the Singaporean investment company BIL International, as "opportunistic". Shares in Thistle rose 3 per cent to 122p on speculation that BIL's move would flush out other bidders.

BIL, which has a 46 per cent stake in Thistle, admitted it had failed to convince the board to back its 115p-per-share offer, but said it was still hopeful of winning over the directors. BIL intends to retain Thistle's 367m net cash pile as well as the final dividend of 3.4p per share.

David Newbigging, Thistle's chairman, said the offer was at a "wholly inadequate premium." He added: "It totally fails to recognise the underlying value of Thistle."

It emerged yesterday that BIL, which has two representatives on Thistle's board, had been responsible for the hotel group's failure to return its net cash to shareholders. "The views of BIL were highly influential in the decision to retain this cash within the company," Thistle said, adding that it was looking at ways to maximise shareholder value.

Arun Amarsi, BIL's chief executive, said Thistle, which was floated by BIL in 1996, had "not performed to expectations ... In good times it lagged other hotels. As a listed vehicle it is not working." To avoid a conflict of interest, Mr Amarsi and Tan Sri Quek Leng Chan, BIL's chairman, who both sit on Thistle's board, have not been involved in any discussions about the offer.

Analysts said the bid was at a huge discount to the group's net asset value of 211p per share. "It's not a serious offer. It's an insult to Thistle shareholders," Mark Abramson, at Bear Stearns, said.

William Claxton-Smith, at Insight Investments, which has a 4 per cent stake, said he would back Thistle. Another top 10 investor called the move, which came one day after Hugh Osmond launched a 5.6bn hostile bid for Six Continents, a wake up call for hotel groups. "It is about getting the bidding going. [This] is a redrawing of the map in the hotel sector."

Thistle, which is being advised by Merrill Lynch, denied that Mr Newbigging's position on the bank's board heralded a possible conflict of interest. "Merrill, which handled Thistle's float, was appointed after a full beauty parade," a source said.

I am sure they wil be a lot less interested when the cash mountain has gone - if you think about it - they only have to buy the 52% not owned and that will cost them less than the money in the bank. Almost daylight robbery as they want the divi as well. Personally - I will stay with it for now ......


ains


(AFX-Focus) 2003-03-04 22:54 GMT: ROUNDUP Thistle Hotels rejects 115 pence per share bid from BIL
LONDON (AFX) - Thistle Hotels PLC has rejected an offer by its largest shareholder, Singapore-based BIL International Ltd, for the remaining 54 pct stake in the business which it doesn't already own.
Thistle said it believes BIL's cash offer of 115 pence per share, which values the group at 555 mln stg, is opportunistic and fails to recognise the underlying value of the business.

It also highlighted BIL's intention to retain Thistle's proposed final dividend of 3.4 pence per share.

BIL, which already has a 45.8 pct stake in the group, expressed disappointment at the rejection in an interview with AFX News.

"We're hugely disappointed they've taken that line because it palpably isn't an opportunistic offer. We're paying a multiple of 22.1 times historic earnings and, in anyone's book, that's a very high offer," BIL chief executive Arun Amarsi told AFX News.

"We hoped they would take a different view but ultimately it's the shareholders who will decide and we think shareholders will take a different view," he added.

Amarsi believes the offer provides Thistle shareholders with "the opportunity to realise in cash their investment in Thistle whilst removing the risk and uncertainty in connection with the current challenges facing Thistle and the UK and global hospitality markets in general".

Schroder Salomon Smith Barney said the offer represents "a reasonably attractive price for shareholders, given tough trading ahead and Thistle's subscale hotel portfolio".

The broker added that BIL's existing stake reduced the likelihood of a higher, alternative bid emerging.

Amarsi insisted that comparisons between the offer price and Thistle's net asset value per share of 222 pence were "inappropriate" when assessing the bid.

"There are a lot of differences between a property company and a hotel company. Property companies have leases with their tenants that last between 15-25 years. By contrast, a hotel company has no security of income. Secondly, a hotel company has much bigger overheads," Amarsi said.

At 2.52 pm, Thistle shares were trading at 121-1/2 pence, up 3-1/2, and ahead of BIL's offer price, suggesting investors believe a higher offer, either from BIL or another party is possible.

However, Amarsi described the chances of another bidder coming in as "extraordinarily unlikely".

"We start at 46 pct and, if there was another bidder around, they would have come and talked to us first.

"Secondly, Hugh Osmond was desperate to try to find a hotel operator to join his bid (for Six Continents PLC) but was unable to. Why should anyone look at Thistle's assets if they aren't prepared to look at Six Continents' assets?"

Thistle yesterday reported a 30 pct drop in 2002 pretax profit before exceptionals to 30.9 mln stg.

The group had 367 mln stg of gross cash at year-end 2002, equating to 76 pence per share.

Amarsi said, if the offer is successful, BIL will conduct a strategic review of the business. matt.scuffham@afxnews.com

mps/lam

March 05, 2003

Investor's hostile bid spurned by Thistle
By Mark Court TIMES



THISTLE HOTELS, Londons biggest hotels group, yesterday rejected a hostile cash bid for the company by its largest shareholder.
The four-star hotels group, which owns more than 55 properties in the UK, dismissed the offer as wholly inadequate.

BIL International, which owns 46 per cent of Thistle Hotels, is proposing to pay 115p a share for the stock it does not already own, valuing Thistle at almost 555 million.

Thistle shares, which have climbed from a 12-month low of 89p last month as the prospect of a bid from BIL emerged, rose a further 4p yesterday to close at 122p.

David Newbigging, Thistles chairman, said: This offer is opportunistic and at a wholly inadequate premium. It totally fails to recognise the underlying value of Thistle and the board of Thistle has no hesitation in rejecting it.

BILs offer came a day after Thistle, which has suffered from trading difficulties, reported a 32 per cent fall in full-year profits to 30.9 million before tax and exceptionals.

Analysts said that yesterdays rise in Thistle shares to above BILs offer indicated that BIL would have a tough task to convince shareholders that its offer price is adequate.

Peter Joseph, an analyst with KBC Peel Hunt, urged Thistle investors to resist the offer, saying: We believe fair value is at least 150p and probably closer to 175p because of the net asset value and longer-term prospects.

Thistle has a net asset value of about 211p a share, but its trading outlook is clouded by a possible war in Iraq and general economic weakness.

BIL defended its offer by saying that it represented a multiple of 22 times Thistles 2002 earnings.

Analysts said that a rival offer for Thistle was unlikely because of the size of BILs holding.

It is understood that BIL previously tried to sell its stake in Thistle, but was unable to find a trade buyer, indicating that a rival bid is unlikely.

BIL is determined to press ahead with its 115p offer, leaving investors to decide whether its bid is reasonable.

If successful, the bid would mark the second time that BIL, which was formerly the investment vehicle of Sir Ron Brierley, the New Zealand corporate raider, had control of Thistle.

BIL took Mount Charlotte Investments, the forerunner to Thistle, private in 1991 and five years later refloated it.

BIL, which is now based in Singapore and whose chairman is Tan Sri Quek Leng Chan, said: The further development of the company would be best achieved in the private arena, away from the cyclicality of the public equity markets.

BILs chairman and Arun Amarsi, its chief executive, are non-executive directors of Thistle, but are not participating in board discussions about the BIL offer.

In 1998, the shares soared to 250p after an abortive bid by Guy Hands, then of Nomura International. At the end of last year Orb Estates, the discredited property firm, said that it was considering a bid, but it withdrew under pressure from the Takeover Panel



hmmmmmmmmm ...... the following might be more credible if they hadn't lost about 50p a share from the cash mountain - really sloppy research

ains



March 05, 2003

Tempus by Suzy Jagger

Time to keep grip on Thistle



OPPORTUNISM is an essential part of business. For this reason, BIL cannot be blamed for launching its 115p-a-share offer for Thistle just a day after the company delivered a miserable results update and perhaps just days before the start of hostilities in Iraq.
Thistle, as Londons largest provider of upmarket hotel beds, is particularly exposed to the impact of war on business and holiday travel. The company is also suffering from a series of other problems including its payment dispute with Orb Group, the property company that bought 37 of its hotels last year for 600 million under a sale and management deal.

It might be some time before Thistle trades out of its difficulties so any offer should be weighed seriously by shareholders. The problem is that 115p does not look much, particularly when accepting the offer would mean the final dividend would go unpaid, reducing the value of the offer to just 111.6p a share.

Thistles main defence is its net asset value of 211p a share, which includes net cash of about 23p.

Not only is the realisability of the net asset value in question in the current climate but the use of NAV to value hotel companies is not as persuasive as its use to value property businesses. Hotel income is of a lower quality because income varies each night and costs are higher. On an earnings rather than a NAV basis, BILs offer seems more reasonable. For example, the offer, on an earnings before interest, tax, depreciation and amortisation (Ebitda) basis, values the company at 10.9 times, compared with a sector average of 8.4 times. On a simple price to earnings multiple, BIL is offering 22 times 2002s earnings, which again seems reasonable.

On a sales multiple basis, BIL is offering 3.3 times, compared with a sector multiple of 1.5 times.

The rise in Thistle shares yesterday to 122p a considerable premium to 111.6p indicates that the market believes a higher offer can be extracted, perhaps from a rival bidder. Some believe BILs offer is an attempt to flush out trade interest though this might be optimistic given suggestions that BIL has previously tried to offload its stake but without success.

Even so, a rival offer would be welcome and Thistle shareholders should wait to see if a hotel group seeking to increase its London exposure might be flushed out. BIL, already rejected by Thistle management, might also be minded to increase its offer to secure the deal. Hold.

Thistle bristles at 555m cash bid
By Alistair Osborne, Associate City Editor (Filed: 05/03/2003) Telegraph


Thistle Hotels, London's biggest hotelier, yesterday roundly rejected a 555m cash bid from its major shareholder, Singapore-based BIL International, calling it "wholly inadequate".

BIL, which is chaired by Malaysian tycoon Quek Leng Chan, already owns 45.8pc of Thistle. BIL said its 115p-a-share offer to take the company private offered the best route for the remaining shareholders to exit a company hit by tough hotel trading conditions in an "uncertain global economic and political climate".

The offer was condemned by other shareholders, some of which paid 170p a share when BIL floated the company seven years ago, as "opportunistic" and "derisory". Thistle shares rose 4 to 122p.

The government of Singapore, which is Thistle's second biggest shareholder, controlling about 19pc of the shares and represented on the board by Lau Wing Tat, backed the company's rejection of BIL's offer.

Ian Burke, Thistle's chief executive, said the group had cash on its balance sheet of 367m, equivalent to 76p a share. He said it meant BIL was effectively only offering "39p a share for Thistle's hotel business", whose properties include London's Royal Horseguards and Thistle Tower.

Bankers said BIL had turned down approaches at more than 160p a share in recent years, though sources close to BIL said they were not firm offers. Analysts also pointed out that Thistle had net assets of 211p a share, much more than BIL's offer. One said: "They're just trying to get it on the cheap, when hotel businesses are bombed out."

Arun Amarsi, BIL's chief executive, denied this, saying: "What the NAV ignores is that Thistle has 260m of high-yielding debt and that the earnings from this business are disappointing. In the past number of years, Thistle has spent 200m-300m on capital expenditure but is not delivering a return."

He added that "there are a lot of differences between a property company and a hotel company", with hotel businesses having "no security of income". Turnover at Thistle fell 7pc last year to 151m with average room rates down 10pc.

Analysts said the bid would put pressure on Thistle to return around 200m of cash and possibly encourage Mr Burke to team up with a venture capitalist to buy the business.

Mr Burke declined to comment, except to say: "We are reviewing all our options."

Some of the hot money is exitting with their profits this AM - mm's ticking down



ains

BIL International Limited 6 March 2003

CASH OFFER BY HSBC

ON BEHALF OF BIL(UK) LIMITED

FOR THISTLE HOTELS PLC


ANALYSIS OF UNDERLYING VALUE


BIL notes the Thistle board's rejection of its Offer and its statements
regarding the underlying value of Thistle outlined in its announcement of 4
March 2003 titled 'Rejection of BIL International Limited's ('BIL') offer'.


BIL believes that the Offer represents an opportunity for Thistle
Shareholders to realise their investment in Thistle with certainty, at a
price of 115 pence per share, against a background of poor trading
performance in the UK hotel market and an uncertain outlook.


Thistle has compared the Offer Price to the three month and 12 month
average prices for Thistle Shares, based on the period up to 20 February
2003. BIL believes that this fails to address that Thistle's share price has
been supported by the bid speculation which has surrounded Thistle during
the past year including, inter alia, Thistle being in a formal offer period
from 4 November 2002 to 9 January 2003, as a result of certain announcements
by Orb. Following the ending of this offer period and the Thistle trading
statement of 16 January 2003, Thistle Shares fell to a 12 month low of 89
pence per share on 29 January 2003. The Offer represents a premium of
approximately 29.2 per cent. to this price.


Thistle's multiple of enterprise value to pro-forma EBITDA* for the year
to 29 December 2002 (as derived from the Offer Price) represents a premium
of approximately 35 per cent. to the average corresponding multiple of a
peer group of listed UK hotel companies (shown in Appendix 1),
notwithstanding that the peer group includes Six Continents which is itself
the subject of an offer.


The Offer Price of 115 pence represents a multiple of approximately 22.1
times Thistle's reported adjusted earnings per share from continuing
operations for the year ended 29 December 2002, compared to an average for
the peer group of 11.4 times. Using a pro-forma adjusted earnings per share*
for Thistle for the year ended 29 December 2002, a multiple of approximately
27.2 times is derived; a premium of approximately 138 per cent. to the peer
group.


Equally, the enterprise value of Thistle derived from the Offer Price
represents a multiple of 8.5 times Thistle's pro-forma EBITDA* for the year
to 29 December 2002, which exceeds the average corresponding multiple of 8.4
times derived from comparable recent transactions in the UK hotel sector
(shown in Appendix 1).


Thistle has compared the Offer to its net asset value ('NAV'). BIL
believes that NAV based valuation methods are appropriate for property
investment companies, but not for hotel companies.


BIL considers that an earnings based valuation approach is more
appropriate for hotel companies, as they are significantly different to
property investment companies in a number of ways, including:


- Capital expenditure - hotels generally require significant maintenance expenditure, the cost
of which is typically borne by the hotel owner, while property investment companies usually
pass these costs on to tenants.

- Income - unlike hotel companies, UK property investment companies tend to be characterised by
commercial leases with upward only rent reviews.

- Cost base - the cost base of a hotel company is typically significantly higher than that of a
property investment company.


In addition, Thistle's calculation of NAV fails to take account of the current
value of its long term debt or of its contingent capital gains tax.

Further detail of BIL's views on the underlying value of Thistle is set out in
Appendix 1.

Hmmmmmmm ..... clearly the market does not agree - ticked up


LONDON (AFX) - Singapore based BIL International Ltd has defended its 115 pence per share offer for Thistle Hotels PLC.
In a statement to the stock exchange, BIL, which saw its move for the hotel chain rebuffed, said the offer gave Thistle shareholders an opportunity to realise their investment in the group against a background of poor trading performance in the UK hotel market and an uncertain outlook.

BIL was responding to Thistle Hotel claims that the offer, which values the group at 555 mln stg, was opportunistic and failed to recognise the underlying value of the group.

In a statement to the London stock exchange today, BIL said Thistle's share price over the past year had been boosted by bid speculation.

It said the offer Price of 115 pence represents a multiple of about 22.1 times Thistle's reported adjusted earnings per share from continuing operations for the year ended Dec 29 2002, compared to an average for the peer group of 11.4 times.

Using a pro-forma adjusted earnings per share for Thistle for the year ended 29 December 2002, a multiple of about 27.2 times is derived; a premium of about 138 pct to the peer group.

Equally, the enterprise value of Thistle derived from the offer price represents a multiple of 8.5 times Thistle's pro-forma EBITDA for the year to Dec 29 2002.

This exceeds the average corresponding multiple of 8.4 times derived from comparable recent transactions in the UK hotel sector, it said.

It added Thistle's calculation of its NAV value fails to take account of the current value of its long term debt or of its contingent capital gains tax.

BIL said it considers that an earnings based valuation approach is more appropriate for hotel companies, as they are significantly different to property investment companies in a number of ways, including Capex, income and cost base.

rn

I must admit I don't think much of the offer. The hotel sector as a whole has not been too well since 11 Sept, and won't recover until after the US stops scaring people off taking trips for whatever reason. Long term the sector will recover and I think BIL is trying take the oportunity to get thistle on the cheap while they can.

Totally agree .... we are at bottom of the cycle - would rather wait for better times at the moment .... it's sily of them saying take our offer when the market is much higher


ains

Does anyone else hold these shares?

I've got some too. Originaly bought in at floatation but sold them for a small profit just prior to the Nomura interest a few years back. Then bought back in and still holding. Not one of my better investments but have had the divi's and return of capital since.

Do you have any thoughts on the offer?

Three blocks of 100,000 shares sold today at 121, 122 & 122 - someone selling short?

Seems unlikely - the trades may not be connected - may just be TTraders closing. The risk against reward seems very poor for a short. The bidder will have started incurring heavy expenses and unlikely to just walk away imho and may well be someone else interested. Plus the cash back situation and divi



ains