Debt-ridden sports and leisure club operator Crown Sports has urged investors to reject the £14.5 million offer for the company from Bennelong – a firm linked to chairman Jeff Chapman. Elliott Davis reports.

Although fully-listed Crown had debts of almost £50 million at the half-year stage, director Ray Pearce argues that Bennelong's offer of 5p per share 'substantially undervalues' the business. 'We will be writing to shareholders next week and advising them to take no action at this time,' he says.

Alongside his fellow independent non-executive directors, Pearce claims to be considering all methods of 'maximising' shareholder value. Options include selling 'some or all of Crown's trading businesses', including former Aim-listed health club operator Dragons, health and fitness contracting business Fitness Express and Crown Golf Clubs.

Recently-announced interim figures showed the extent of Crown's problems. Profits were down £200,000 to £1 million in the six months to June, and debts were up slightly at £49.3 million.

Borrowings have since been reduced, thanks to the £14.5 million sale of Crown's stake in leisure club operator Esporta. But trading conditions throughout the remainder of 2002 and into 2003 are expected to remain tough.

Shares in Crown beefed up 15 per cent to 5.75p following this morning's statement.