By Lavern Clarke, Staff Reporter 
Issa and Bovell
NATIONAL CONTINENTAL Corporation (NCC), a local company owned by the Hendrickson family, has put in a formal bid for full acquisition of local corporate hotel, the Jamaica Pegasus, but the hotel's board is uncomfortable with the wording of the offer and will be seeking regulatory advice on how to proceed.
NCC wants all, or at least nine-tenths of the hotel, but its offer comes with what the Pegasus board views as unusual conditions not normally associated with an offer for shares.
It wants the Pegasus to wind up all contracts it has in place, and to make the staff redundant.
"It was a highly conditional offer to buy all the shares or not less than 90 per cent," Pegasus chairman John Issa said Monday at the hotel's annual general meeting. "But it was subject to the company terminating the staff and that the assets be free of all encumbrances."
Issa later told Wednesday Business that while the bid was couched as an offer for shares it "was conditioned on things outside the shareholders' control."
The Hendricksons have put a figure on the table, which Issa refused to disclose ahead of the advice the hotel is seeking, but indications are that the bid falls below $345 million. The Hendricksons did not return calls for comment.
"The price wasn't put in a dollar per share figure, but it was less than the valuation of the land alone," Issa told shareholders. The land was last revalued in 1993, and has a book value of $345.195 million.
At the current price, the hotel's issued share capital of 114,144,181 units is worth $172.81 million. But its net book value is almost five times the market value at $855.8 million.
SEEKING ADVICE
Issa has instructed director Christopher Bovell to write to both the Jamaica Stock Exchange, on which Issa sits as a council member, and the Financial Services Commission seeking advice on how to treat this matter.
Speaking with Wednesday Business, the chairman said the hotel board needs to know what constitutes the true offer - whether it is the quoted price on the table, or the price less the charges associated with the conditions.
The directors essentially want to determine whether the tidying up charges for staff and contract terminations becomes a charge on NCC or Pegasus Hotels. The hotel has 256 staff, 50 of whom are employed on a part-time basis.
Issa said the hotel had to proceed cautiously as the shareholders could end up with much less in a dollars/share sense at payout than the current offer on the table.
The directors had already nixed a verbal offer to deputy chairman Dr. Vincent Lawrence from the Hendricksons to manage the 350-room property, claiming conflict of interest since the family owns and operates a direct competitor, the Courtleigh. They also said a flat no to the family's offer to acquire the real estate only.
An international hotel company has expressed interest in the Pegasus, Issa said, but has made no offer. His company, Village Resorts, is currently working out a deal with the hotel to offer technical and operational advice, and perhaps take management control of the hotel in another year.
Pegasus shares traded steady on the stock exchange at $1.51 yesterday. The chairman had earlier cautioned shareholders to hold out for more than the share is currently priced at on the market, if approached.
"Yes, but five years of losses is a long time," one shareholder shot back. The hotel last made a profit in 1997.
Pegasus is currently majority owned by the state operated Urban Development Corporation (UDC) through its subsidiary National Hotels and Properties (NHP). Both agencies are chaired by Mr. Lawrence. Together NHP and Mr. Issa hold 83 per cent of the shares. Queried about one of its faceless shareholders, Middle East Ventures, Mr. Issa said he had the proxy signed by a bank in Cayman to vote the company's more than 18.8 million shares.
Both Mr. Issa and Mr. Bovell were retired as directors, but were immediately re-elected to the hotel's board.
