Onus back on Resimac as Pepper spices up offer for RHG

The takeover battle for the rump of mortgage lender RAMS, now known as RHG, has sprung back to life with a new offer from Pepper Australia.

Pepper, which is competing with non-bank lender Resimac to buy RHG, raised the cash component of its bid by 1¢ a share on Monday, upping what it is prepared to pay for the target company by about $3 million.

The latest offer is comprised of 36¢ a share in cash and one share in listed fund manager Cadence Capital for every 10 RHG shares. Using Cadence's closing price before the new bid was announced, the proposal is worth 50.8¢, 1.3¢ higher than Resimac's bid of 49.5¢ a share. However, the bid's value changes in line with the Cadence share price.

RHG directors, who had previously decided Resimac's offer was superior, said they were assessing the latest tilt at the company and urged shareholders to be cautious.

RHG is required to give Resmiac three days to provide a counter proposal. RHG closed up 1¢ at 49¢.

The target's board rebuffed a previous offer from Pepper, because it said there could be insufficient liquidity in Cadence. Pepper has responded by saying the Cadence board has agreed to a share buyback if the company's stock price falls "materially" below its net tangible assets.

RHG's main asset is the lending book of RAMS, which was a competitor to the big banks before the global financial crisis. In 2007, the RAMS branch network and brand was sold to Westpac for $140 million. RHG made a profit of $30.3 million last financial year.