Investor Paul Bilzerian said if Pay N'Pak Stores Inc enters into a merger accord with him he will
immediately begin a tender offer for 7.5 mln shares for 20 dlrs
per share in cash.
    Bilzerian told Reuters he believes his offer is superior to
a leveraged buyout proposal disclosed in an announcement by the
company this morning.
    The company said it is evaluating both proposals.
Bilizerian said he was optimistic his offer will be accepted at
a meeting of the board of directors Wednesday. Officials of Pay
N' Pak did were not immediately available for comment.
 
    Bilzerian said he has a pool of 150 mln dlrs raised by
Shearson Lehman Brothers Inc available for the tender and "we
may add a bank to that."
    "We've submitted an agreement we're prepared to sign," he
said. Shares not accepted in Bilzerian's tender would be
exchangeable for 20 dlrs in convertible preferred stock.
    Asked what would happen if the leveraged buyout group,
which the company did not identify, topped his offer between
now and the board meeting, Bilzerian said he expected an
opportunity to respond.
    Pay N' Pak gave no details about the buyout group, but did
say the offer was contingent on financing and on an agrreement
regarding management's equity participation.
    Bilzerian said it was his understanding that the management
particpation was "nominal."
    Pay N' Pak fell 1-1/2 to 19. Arbitrageurs said there was
disappointment that neither of the offers topped 20 dlrs.
    "We were expecting an offer north of (above) 21 or 22
dlrs," said one arbitrageur. The leveraged buyout plan was for
17.50 dlrs per share in cash and 2.50 dlrs in 13-1/2 pct
cumulative preferred stock.

    Robert Cheadle, analyst at Montgomery Securities, said "you
have to ask yourself why no one in the industry made a bid."
    Scott Drysdale, analyst at Birr Wilson Securities, said the
company has not made the best strategic moves over the years.
"They have not done the right things at the right time," he
said, and as a result earnings per share have steadily declined
since 1984. The 57 cts per share in earnings reported for the
fiscal year ended in February was lower than 1978's earnings,
he said. Earnings totaled 5.7 mln dlrs on revenue of 398.4 mln
dlrs.
    Drysdale said Pay N' Pak has better trained sales people
than many competitors, but it competes on price even though
competitors have lower costs. The result is squeezed margins.
He noted that there have been no other publicly identified
bidders stepping forward since the company rejected an earlier
Bilzerian proposal in mid-April.
    Another arbitrageur said it might not be too late for
another bidder to get in the game. He speculated that someone
in the same home improvement business might be able to offer a
deal for stock that would top both the buyout proposal and
Bilzerian's plan.
 Reuter
