With some 114.95 million shares on issue, an offer of A$3.00 per share could potentially be worth some A$345 million.

"Given its highly conditional nature, directors are not supportive of the proposition at this time," Energy Developments said in a statement to the Australian Stock Exchange.

Pahor and AACIA told the company their offer was conditional on confidentiality, a common view on the timing of disclosure, one month's due diligence before a firm offer is made, and two month's due diligence before the takeover is carried out.

CommSec analyst Michael Smiddy was not so quick to dismiss the conditional offer. He said wholesale management and strategic changes were required for Energy Developments, which posted a fiscal 2002 net profit of A$20.8 million, to improve.

"In the interests of shareholders, the board should consider seriously any takeover offers made at a premium to the current share price," Smiddy said.

However, a spokesman for AACIA said yesterday that no proposal for a takeover offer had been made and that the letter sent to Energy Developments had simply requested further information on the company.

Energy Developments has been plagued by problems with its proposed waste-to-power process and last month announced plans to try to find partners for its Solid Waste and Energy Recycling Facility (SWERF) in an attempt to move the project forward.

Shares in Energy Developments - which had been placed on a trading halt until the company released news of the takeover bid - closed up 26 percent at A$2.80 yesterday.

The company's shares hit an all-time low of A$1.98 at the beginning of November, well down on its record closing high of A$14.35 in November 2000.

SWERF recovers resources such as metals, glass and rigid plastics from the waste stream and then treats the remaining material using gasification. This produces syngas which is used to power spark ignition engines which generate electricity.

The char gasifier, which has been the source of the problems, is used in the final stage of the gasification process.

The company has a worldwide power generation operating capacity of more than 370 megawatts, with operations in Australia, France, Greece, South Korea, Taiwan, the United Kingdom and the United States.

In July, Xcel Energy (XEL.N) subsidiary NRG Energy sold its 25.5 percent stake in Energy Developments for around A$78 million as part of its attempt to reduce its debt.