Lehman Brothers subsidiary Giant Mauritius Holdings has bought a 50.1% stake in listed Thai hotel, condominium and resort developer Grande Asset for $80 million and a tender offer is now underway for the remaining shares.

The offer is being carried out by Giant Mauritius in conjunction with a Thai nominee company, Hotel and Property Development Co, in order to accomodate Thai law on foreign ownership limits. Given the imputed price/earnings ratio is 225 times, the offer looks set to succeed.

Credit must go to the Thai owners of Grande Asset for not only offloading external bank debt of $260 million, but in addition obtaining a cash sales price of $160 million. Only six months ago, the companyÆs market capitalisation was approximately $50 million, and in the few months since then, Thai equities in general have not performed well.

In the six months before the purchase, the Grande Asset share price has however steamed back up from lows of less than Bt1.5 to Bt4.85, which is the level at which this acquisition is priced.

In the notes to its latest financial statements, Grande Asset admits that loan covenants are in breach and as notices of default may now be due, they have had to classify a significant amount of loans as due at call. The bank lenders are protected from this quivering pile of leverage however, because they possess the collateral of Grande AssetÆs land and buildings.

The jewel in the Grande Asset crown, and its sole mature property asset, is the 360-room, Westin Grande hotel, located at Soi 19 of Sukhumvit Road, in the tourist and business district of Bangkok.

Shaped like a giant ocean liner, the hotel stands above the Asoke branch of McDonald's and the Robinsons Department store and supermarket, both of which provide rental income for Grande Asset, at the cosmetic cost of some of its five star cachet. It occupies a central location in town and stands a stoneÆs throw from some of BangkokÆs most enjoyable watering holes.

Those who are familiar with that lively and vibrant part of Sukhumvit Road are well aware of the Grand Guignol of street theatre that unfolds on the stretch of pavement outside the Westin Grande after sunset, as BangkokÆs young men and women put on their best frocks and make their way there.

Grande AssetÆs building projects include flats in Pattaya, Bangkok (ôThe Trendy Condominiumö) and Huahin. Its ongoing development hotel projects include the Regent Bangkok and Crowne Plaza Sukhumvit.

With the exception of the Westin Grande, the projects are new, in presale, or still being built. This attests to the bullish convictions of the acquirer about the Thai luxury property market, which has been disconcertingly soft in the last couple of years.

Grande AssetÆs previous association with foreign shareholders has not been a happy one. After its IPO at the beginning of 2004, the share price tanked. Grande Asset blamed foreign shareholders for dumping their allocations and publicly criticised its investment bankers.

Sources close to the deal speculated that portraying æforeignersÆ as the whipping boys may have been a smokescreen to disguise the disposal of shares by locals. The Grande Asset share price languished for two years, falling from Bt5 to below Bt1.50.

Lehman has confirmed that whilst some incumbents will remain directors, they will have no day-to-day managerial role and Lehman has placed its own CEO and CFO at the company.

After the debacle of the IPO, and with the well soured, many in the industry wondered if Grande Asset would ever be able to return convincingly to the equity capital markets. Would anyone want to touch Grande Asset with a barge pole? With this private acquisition, which brings the company's control under strong American ownership, that conundrum is now resolved.