English Rose, a company controlled Panther Securities boss Andrew Perloff, has agreed a £1.23m deal to takeover department store group Beales.
The recommended cash offer of 6p per share offer represents a discount of approximately 48% to the closing price of 11.5p on Friday.
Beales board said the offer price is disappointing and that in different circumstances it could have achieved a price that would value the business and assets more fully. But it added the complex capital structure inherited by the current board imposes a number of restrictions on Beales’ ability to fund its activities, including the requirement for the concert party to agree to any of the alternative funding options the Beales board has identified.
As a result, Beales may be unable to generate sufficient cash flows to meet its financial commitments in the future.
Accordingly, the Beales board told shareholders to carefully consider the future risks facing the Beales group and may wish to accept the offer, depending on their own individual circumstances and appetite for risk.
Last summer, Perloff, the colourful, Ukip-supporting chairman of property group Panther Securities, accused the group of setting “some type of record” for foolish behaviour after his representative Simon Peters was ousted from the board.
Panther Securities and its associates already holds 29.72% of Beales, as well as owning the freeholds of 11 of the company’s 30 stores and providing a £1m loan.
Beales chairman William Tuffy said: “English Rose’s proposal offers the certainty of a cash exit for shareholders today and improves the medium term financial security of the Beales business. Despite the significant progress made by the current management team in first stabilising and then greatly improving operating performance, the business continues to face significant challenges and financial constraints.
“The board of Beales has explored all other realistic alternatives to raise additional capital to address these challenges and constraints but none could be delivered without the concert party’s agreement and consequently, we believe that this proposal represents a better alternative for all stakeholders than the business continuing with its current capital structure, given the level of risk this would entail.”
Beale’s share price collapsed 47.83% this morning, reflecting the offer figure of 6p.