Apr. 25--For the fourth time in two years, Interstate Hotels Co. has spurned a buyout proposal from the Shaner Hotel Group, recommending that Interstate shareholders reject Shaner's current offer to buy a controlling stake in the Green Tree hotel management company. 

In a strongly worded letter issued to shareholders yesterday, Interstate chairman and chief executive officer, Thomas Hewitt, described Shaner's $7.39 million offer for 46 percent of Interstate's outstanding stock as "financially inadequate." The $3-per-share proposal, which expires May 31, "does not fully reflect the inherent value of our company," Hewitt said. 

Hewitt also took shots at the experience of Shaner, a State College-based company that owns 22 hotels, including the 151-room Hawthorn Suites Hotel Pittsburgh in Green Tree and the 402-room Pittsburgh Marriott City Center in Pittsburgh's Uptown area. Shaner, according to Hewitt, "has no experience in running a public company," has "limited experience in managing upscale properties" and "has limited, if any, experience in the international lodging industry." 

If Shaner succeeds in purchasing a controlling stake in Interstate, Hewitt said, it could lose many of Interstate's current management contracts, thus adversely affecting the value of the company's stock. Also, if Shaner takes over, the remaining stockholders could lose their influence over Interstate's management and makeup of Interstate's board, Hewitt said. 

How Shaner will respond to Interstate's recommendation is not yet known. Shaner Hotel Group Chairman and Chief Executive Officer Lance Shaner was not available for comment yesterday. 

In a March 27 interview, though, Shaner said: "I am not going away. I am determined." Shaner, in that interview, made his case for a change at Interstate, citing the hotel management company's losses in recent fiscal years, its low stock price, its loss of certain management contracts and recent business decisions that Shaner considers questionable. When asked why he wanted to run Interstate, Shaner said: "I'd like to see Interstate become again what it once was. I think I can provide the leadership, and take it to that level." 

"I am interested in Interstate for all the right reasons." 

Shaner already owns about 6 percent of Interstate. The tender offer would give Shaner Hotel Group 51 percent of the shares as well as control of the company. Since October 2000, Shaner has made four attempts to buy Interstate, which operates 135 hotels in the United States, Canada and Russia. The first attempt, when Shaner offered to buy Interstate's stock for $26 million in cash, was rebuffed when Interstate shareholders voted instead for a $30 million infusion from a group of investors organized by Wall Street firm Lehman Brothers. 

Interstate rejected two subsequent offers, but said it would consider Shaner's most recent proposal, made in March. 

In rejecting it yesterday, Interstate's CEO promised shareholders that the company would return to profitability in the third quarter of 2003, expand its international operations and begin acquiring more hotels as the hospitality industry recovers from a post-Sept. 11 fallout. 

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(c) 2002, Pittsburgh Post-Gazette. Distributed by Knight Ridder/Tribune Business News. IHCO,