Fabulous Inns on Tuesday made a tender offer for 600,000 of its shares, the embattled hotel company's court-appointed receiver said Tuesday. The stock closed up 50 cents to $4.50 on Tuesday.
Fabulous Inns will use a long-term note backed by the company's Mission Valley hotel to pay shareholders for tendered shares, according to a spokesman. The hotel has an appraised value of $9 million, according to documents filed with the Securities and Exchange Commission.
The tender offer was part of an agreement hammered out during recent months by retired Judge Donald W. Smith, who was appointed receiver in April.
According to terms of the agreement, the company will buy as many as 600,000, or 61%, of the company's 994,651 outstanding shares. Jeffrey Krinsk and David Yardley, two dissident former board members, will tender their shares. A group of current members led by Chairman Frank E. Ferreira agreed not to tender their shares.