Bidders line up with offers to buy Heron

TWO FIRM offers to buy Heron, Gerald Ronson's debt-laden property to petrol stations group, have already been received by the company's advisers, writes John Willcock.

A further three offers are being finalised, well ahead of the 15 June deadline for deciding on a preferred bid.

Schroder Ventures has already publicised its joint bid with Goldman Sachs. Most of the other bidders are overseas investors, particularly Americans, who specialise in debt restructurings.

Other US investment banks that have been suggested as possible bidders include Morgan Stanley and Merrill Lynch.

Some of the bidders want to convert some or all of Heron's pounds 1.3bn debt into equity, rather than offer bondholders and banks cash for a percentage of their debt.

The key question in each bid will be what offer will be made to Heron's bondholders, who represent more than pounds 250m of debt. The bonds are currently trading at about 40p in the pound.

A further complication is that many of Heron's banks are also bondholders. Banks are reluctant either to equitise their bonds or sell them at a discount if either course crystallises a bigger loss than they have already provided for in their accounts.

Heron's adviser, UBS, therefore has an uphill task in finding a bidder that will satisfy both the banks and the bondholders.