£200m deal on the table for Holmes Place

In an institutional buyout, a cash offer for health and fitness company, Holmes Place, has been made by Health Club Group.

The offer, unanimously accepted by the independent directors of Holmes Place, values each Holmes Place share at 25p and the company at approximately £25.4m - plus Health Club will assume £175m in debt.The directors revealed the key reasons for their acceptance of the offer as being:

• Holmes Place is currently in material breach of its existing banking arrangements.• The company has committed capital obligations of about £73m during the next three years, which could not be funded out of its existing debt facilities• The company's trading deteriorated significantly during 2002• The company continues to underperform against budget and the outlook remains uncertainThey believe the offer fairly values the company and provides an opportunity for Holmes Place shareholders to derive fair value from their investment when the company's future prospects are uncertain.

Should shareholders not accept the offer, Holmes Place will have to renegotiate its banking arrangements in order to continue trading and there is no guarantee that its banks will be willing to do so.The HC Group board consists of Holmes Place chief executive, Allan Fisher; Holmes Place non-executive director, Lee Ginsberg and four representatives of the investors - Guy Weldon, Michael Black, Charlie Troup and Ian Sellars.

Fisher and Ginsberg will be remaining with Holmes Place and a spokesperson for Bridgepoint said that the company's management team would be bolstered at a later stage.Following completion of the offer, Holmes Place will be effectively controlled by funds managed or advised by venture capitalist groups Bridgepoint and Pemira.

Bridgepoint originally offered 175p per share for the company last year but health and fitness group, Cannons, subsequently offered 200p. This bid was later withdrawn. Details: www.holmesplace.com