Bid for TVS runs into a problem

INTERNATIONAL Family Entertainment, the US cable television group, has threatened to abort its pounds 50m bid for TVS Entertainment, the former ITV company, unless holders of more than 75 per cent of the group's preference shares accept the offer.

However, one of the leaders of the rebel preference shareholders, who claim the offer discriminates unfairly against them, says he is prepared to call IFE's bluff unless it increases its bid. IFE is offering 23p in cash or shares worth 35p for the ordinary shares and 43p in cash or shares worth 65p for the preference shares.

If the company was wound up, as has been suggested, the preference shareholders would have to be paid in full before the ordinary shareholders saw a penny.

IFE has received acceptances from 78.4 per cent of the ordinary shares but only 42.6 per cent of the preferences. It needs to win 75 per cent of both before the final closing date next Tuesday, to cancel TVS's Stock Exchange listing.

Julian Treger, of Restructuring Associates, said he either represented or was in close contact with holders of more than 30 per cent of TVS's preference shares who were committed to rejecting the present offer. He added: 'If they raise the offer, they will get 75 per cent. If they don't, they won't.

Though IFE, through its advisers Morgan Grenfell and James Capel, has warned the rebels that it may walk away from the deal, the feeling among preference shareholders is that it will return with a cash offer of about 70p a share.

'IFE does not want to lose this bid,' one shareholder said. 'TVS is too valuable. It has more than pounds 30m of cash and nearly pounds 200m of tax losses.'

In addition TVS, which lost its ITV franchise on 1 January, owns a studio in Maidstone, Kent, and MTM Entertainment, the US production company.