Plans to develop Shoreham airport as a major employment site will almost certainly be curtailed by the new owners dire circumstances.
Erinaceous Group bought the airport from Brighton & Hove City Council and Worthing Borough Council in 2006 for just under £8m (see earlier story in knowledgebase) and had ambitious plans to develop the site including new offices, additional hangar space and an overhaul of the terminal building.
The Highways Agency has expressed concerns about access to the site from the busy A27 and one of the hangars that had been earmarked for demolition was unexpectedly listed. But these are the least of the problems now that the owner has revealed that it’s debts have more than doubled to £168m and it continues to lose money. The company posted a loss of just over £3m for the first six months of this year.
It wasn’t that long ago that Erinaceous Group was valued at over £400m (see earlier story in knowldegebase) but the company’s directors are now quoted as saying that there is “significant doubts as to the company’s ability to continue as a going concern”.
Founded in 1999 by Neil Bellis and his sister-in-law Lucy Cummings Erinaceous was originally a property services group. Between 1999 and 2004 it purchased no fewer than 17 different companies including estate agents, surveyors, insurance companies, an engineering group, letting agents, debt collection, property management and architects.
In 2006 as part of an investigation by the Serious Fraud Office (SFO) into a suspected fraud against the Cheshire Building Society, the head of valuations of an Erinaceous company – Dunlop Haywards - was arrested and subsequently released without charge.
But it subsequently emerged that other building societies had also been affected and, although Erinaceous maintained its innocence, it reached an out-of-court settlement with Nationwide with a sum of £4.2m being allocated in the 2006 accounts to cover the cost.
From a peak of £4, the share price went down to £2 in March 2007 but it was supported by rumours of a take over with at least two private equity firms showing an interest.
In August the Sunday Times printed a story, which alleged that Erinaceous was owed £1.2m by Fast Helicopters which is owned by Neil Bellis and Lucy Cummings and based at Shoreham Airport. The Sunday Times story also drew attention to the fact that Erinaceous had paid a law firm owned by Neil Bellis’ wife the sum of £1.4m between 2004 and 2006.
The 2006 accounts for the company disappointed City investors because they showed that a substantial part of the profits had been achieved by buying and selling property, which is not the declared core activity of the company. In the past six months the company’s demise has been swift culminating in the events of last week.
On Monday Erinaceous delayed announcing its results and admitted that it risked breaching its banking covenants. On Thursday Neil Bellis was removed as chief executive and on Friday their shares closed at just over 50p.
ECONOMIC PARTNERSHIP COMMENT
The Board maintains that it has sufficient financial resources to meet its trading and financial obligations up to the end of 2008 but, even if this is the case, their plans may be unlikely to include the development of Shoreham Airport although continued current activity at the airport is not threatened.
Erinaceous appear to be in serious financial trouble and their days are probably numbered, which leaves the future development of the airport literally hanging in the air.
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