Sydney-listed real estate group Valad has received an indicative management buyout (MBO) proposal for its European business. The proposal comes from a consortium that includes the CEO of Valad Europe, Martyn McCarthy, as well as managing director Peter Hurley, and senior members of Valad’s European operations.

Sydney-listed real estate group Valad has received an indicative management buyout (MBO) proposal for its European business. The proposal comes from a consortium that includes the CEO of Valad Europe, Martyn McCarthy, as well as managing director Peter Hurley, and senior members of Valad’s European operations.

Valad said that protocols have been established with the MBO group governing how to proceed with the MBO and the ongoing role of the managers in the operation of the business.

Given Hurley's interest in the MBO, he has agreed to take a leave of absence from the managing director role, and all duties that the board considers would involve a conflict of interest. These duties will be shared between Valad's existing senior leadership team with oversight from Valad's chairman Trevor Gerber. Consideration is being given to appointing an acting CEO.

Valad noted that, as previously disclosed, under the current arrangements and in certain circumstances, should Valad choose to sell Valad Europe before 30 June 2012 the net proceeds of any sale must be used to reduce bank debt in DUKE, the 50:50 joint venture with Lloyds Banking Group.

Valad said that it has received advice that the MBO proposal is being considered by Lloyds Banking Group although no formal credit process nor due diligence by Lloyds has yet been undertaken.

'The MBO proposal contemplates that despite the existing arrangements, proceeds of sale will be returned to Valad. At this stage discussions remain incomplete and there is no certainty that any transaction will eventuate,' Valad said.

'The board of Valad continues to review various corporate initiatives that are aimed at maximising value for the group and its securityholders. The independent directors of Valad will manage the process of assessing the MBO proposal as well as any other proposals.'