TORONTO (CP) - A revised offer for Second Cup Ltd. is an improvement but still undervalues the coffee chain, its chief executive said Monday.

A board committee analysing the bid by Cara Operations Ltd. was to meet later Monday to review Cara's upgraded offer unveiled late Friday, which would give Second Cup shareholders $7.50 per share in cash for all of the stock Cara doesn't already own.

"This at least addresses the issue of the partial bid, but hasn't addressed the value," McEwen said. However, he wouldn't say whether the offer will be rejected.

"As soon as something is determined it will obviously be made public," McEwen said, adding that the committee of directors sees little urgency because the bid doesn't expire until early January.

Cara, whose holdings include Harvey's, Swiss Chalet and the Cara airline and hospital food units, already owns 39 per cent of Second Cup.

It said Friday that the new proposal offers a 25 per cent premium over Second Cup's $6 share price on Aug. 10, before Cara presented its original offer.

That offer would have raised Cara's stake to 71 per cent. It was strongly opposed by the Second Cup board, which in a poison-pill defence implemented a shareholder-rights plan.

Mutual fund giant Investors Group owns almost 18 per cent of Second Cup and indicated it would reject the original Cara proposal, as did Second Cup chairman Michael Bregman, who controls 24 per cent.

At the shareholders meeting, Bregman and other Second Cup executives made little comment on the revised bid.

"This is new information," Bregman said. "We will report on any new developments as soon as there is something to report."

Cara chief executive Gabe Tsampalieros, who attended the meeting, told reporters that while the first offer was "very fair and adequate," the new one is even better.

"It takes into account the most significant concern, which was that it was an offer for some of the shares as opposed to an offer for all," Tsampalieros said.

"Shareholders now have ample opportunity to decide on their own whether or not they feel the offer is adequate."

Tsampalieros said the TD Securities analysis overvalues Second Cup compared with similar past bids for other coffee chains, and may be overly optimistic since the Sept. 11 attacks.

Earlier, Bregman said previous acquisitions in the industry - such as Wendy's takeover of Tim Hortons - aren't comparable because the chains are different, with Tim Hortons being recognized for its doughnuts and other food offerings.

And McEwen said Second Cup performs well in uncertain economic climates.

"We've seen some of our best growth during these times," he said.

As for the future, McEwen said he's optimistic the chain will grow as new real estate and "quality" franchise operators become available amid retail industry downsizing.

He said Second Cup particularly wants to increase its presence in Montreal, where its outlets have been outperforming most of its other locations across the country.

The company has about 40 stores in Montreal, fewer than in Ottawa or Edmonton.

Second Cup shares (TSE:SKL) traded as high as $7.80 Monday, indicating at least some in the market expect a more robust bid. Cara (TSE:CAO) was up a nickel to $7.