Intrigue over Erinaceous and £1 airport deal …
By David Doyle''', Mike Phillips
Shareholders ask how bosses won control of operating arm of Fairoaks Airport
Two Erinaceous executives have struck an unusual deal to split ownership of an airport company Erinaceous bought with its own private company.
The property holding companies of an airport near Woking were bought by an Erinaceous subsidiary,
while some of its operating arms were bought by a company controlled by its founder and former chief executive, Neil Bellis.
It emerged this week that in July Erinaceous subsidiary Albemarle bought part of the Fairoaks Airport group of companies for £42m.
After this, Longmint, an aviation and property company owned by Bellis, his wife, Juliet, and her sister and Erinaceous chief operating officer, Lucy Cummings, bought some of the companies in the group for £1.
The deal has raised concerns among shareholders, who are concerned that it will deprive them of value at a time when Erinaceous’s shares have plummeted, which led Bellis to be ousted as chief executive.
The fast-growing property ‘one-stop shop’ has also admitted it is in breach of its loan covenants, and its auditor has warned that there are risks to Erinaceous continuing as a going concern after a first-half loss.
Fairoaks Airport is made up of a group of companies that were formerly owned and controlled by 54-year-old Alan Mann, known as the Alan Mann group of companies.
Erinaceous has bought Fairoaks Holdings and Fairoaks Airport Ltd, which control airport operations and hold some airport property.
Longmint has bought Alan Mann Helicopters and Mann Aviation Group (Engineering) companies that sell and offer aviation-related services at Fairoaks Airport. Their 2006 accounts recorded pretax losses of £70,000 and £219,000, and retained profits of £518,000 and £581,000 respectively.
Erinaceous is thought to have extended a bridging loan to Albemarle of about £15m for the purchase, because it could not raise sufficient funds on its own to complete the deal. Erinaceous stressed there was no conflict of interest in the structure of the deal.
An Erinaceous spokesman told Property Week that all deals with Longmint must be approved by its remuneration committee and that the Fairoaks deals had also gone to the main board.
‘In both cases they were happy with what was being proposed,’ the spokesman said.
Regarding the fact that Longmint has only paid £1 for the companies it purchased, the spokesman said: ‘Erinaceous had the option of buying a loss-making business for a pound, which it declined.
‘Longmint took on that business for what was the market rate.’
In relation to the loan, he said: ‘Any conflict of interest with Albemarle is only a matter of timing. It couldn’t raise the funds to buy the property holding companies without the loan from Erinaceous.’
Erinaceous and Longmint have crossed paths before. In October 2006 Erinaceous bought Shoreham airport in Sussex , where Longmint subsidiary Fast Helicopters is a tenant. Erinaceous submitted redevelopment plans, including a residential scheme at the airport site, but Adur council asked for revisions to the scheme in August.
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Intrigue over Erinaceous and £1 airport deal ? - Property Week