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Company losses cast doubt over airport expansion
THE owner of Shoreham airport has had almost £400 million wiped off its share value since taking over - casting doubts over massive expansion plans.
Erinaceous, the property firm which bought the airport in a cut-price £8.6 million deal in 2006, was already suffering difficulties partly brought about by the credit crunch.
But since December its shares have effectively become worthless, plummeting from a high of around £4 two years ago to just over 1.5 pence each at close of trading last night.
Industry analysts predicted the fall would cripple its ability to fund future projects.
Airport manager and Erinaceous employee John Haffenden said: "I can't say there are not problems but whether they are major or not is a matter of perspective.
"In terms of the plans I'm still very hopeful they will go ahead."
Erinaceous issued a statement to the Stock Exchange earlier this week admitting investors were unlikely to see any money back.
That, coupled with an estimated £200 million debt, a string of failed takeover talks, the ongoing gloom in world financial markets and an alleged multi-million pound fraud in one of its offices, has put expansion plans, including the creation of hundreds of jobs, at Shoreham Airport in major doubt.
Sources have told The Argus staff at the airport are worried about not being paid and that a new buyer for the site could now be in the offing.
However Erinaceous was unable to confirm that any talks have been opened to negotiate a sale.
The firm recently agreed new funding from banks.
However it conceded its financial situation remained precarious and that it planned to sell off its insurance arm, Erinaceous Insurance Services.
The statement read: "The group's banks have committed to provide ongoing funding and the board is in the advanced stages of a plan to achieve a solvent financial solution."
Stockbrokers have told The Argus they believe there is "no way" Erinaceous will be able to survive in its current form and that it would either be broken up and sold off or be forced into administration.
The uncertainty surrounding the future of the airport has led to major criticism from those who opposed its privatisation in 2006.
Previous joint owners Worthing Borough Council and Brighton and Hove City Council sold the airport to Erinaceous for £8.6 million after it impressed both with its bold vision for the site.
Auditors had previously valued the site at £21 million.
Erinaceous's plans included a total revamp of its Art Deco terminal, new business floor space, more commercial flights, the possibility of a dedicated train station and at one stage new homes and a hotel.
Eric Williams, spokesman for the Communites Against Runway Expansion (CARE) campaign group, which opposed the sale, said: "I think may have to revert back to council ownership again, particularly if nobody else wants it.
"I can't see Erinaceous being sold as a going concern. My view is it would be broken up into separate entities.
"So that could mean somebody somewhere would have to take on the airport."
Worthing borough councillor Bob Smytherman said the authority was right to sell the airport but admitted he is now "extremely concerned" over the situation.
ERINACEOUS TIMELINE:
1999: The company was formed by Neil Bellis and his sister-in-law Lucy Cummings.
2006: Its share price rocketed to more than £4 early in the year.
March 2006: It is revealed that staff at one of Erinaceous's subsidiaries had been arrested over an alleged £26 million fraud.
June 30, 2006: The arrest delays the sale of Shoreham Airport, with the deal eventually being completed on this date.
April 2007:With its valuation already on the slide following the fraud scandal and mounting debts from its aggressive expansion plans, Erinaceous enters into takeover talks with bank HBOS and private equity firm 3i.
May 2007: The talks failed to secure a deal and Erinaceous was left to battle on.
December 2007 Its share price plummets to 1pence.
March 2008: Two further directors leave the firm, following the previous resignations of Bellis and Cummings.
5:26pm Wednesday 26th March 2008
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CommentPosted by: Angryman, hard at work on 5:51pm Wed 26 Mar 08
Privatisation delivers once again!
Not. But if we can get it back into public ownership for free we'd have made £6million. Nicely done, I'll admit that!
Privatisation delivers once again!
Not. But if we can get it back into public ownership for free we'd have made £6million. Nicely done, I'll admit that!
Posted by: confused on 6:13pm Wed 26 Mar 08
Seeing as you have a full-time job and are a student, I'm amazed you have the time to vent your spleen on here. Are you doing a thesis on newspaper comments websites?
(Don't get angry now.)
Seeing as you have a full-time job and are a student, I'm amazed you have the time to vent your spleen on here. Are you doing a thesis on newspaper comments websites?
(Don't get angry now.)
Posted by: jj, worthing on 8:46pm Wed 26 Mar 08
This company acquired DGA plc part of the hercules group - a managing agent of many flats in Brighton and the south east..
This company acquired DGA plc part of the hercules group - a managing agent of many flats in Brighton and the south east..
Posted by: Wing Commander, Cloud Nine on 10:06pm Wed 26 Mar 08
And what about the unanswered questions over the councils not getting any proceeds from using the airport land as landfill?
Just goes to show that these firms pull wool over the eyes of councils with talk of "vision" when in fact this is anther one which has turned out to have cataracts.
And what about the unanswered questions over the councils not getting any proceeds from using the airport land as landfill?
Just goes to show that these firms pull wool over the eyes of councils with talk of "vision" when in fact this is anther one which has turned out to have cataracts.
Posted by: Reg Moores, Brighton on 11:25pm Wed 26 Mar 08
The airport will always be a failure until the Shoreham Airport Halt Station is put back again. Removed for security at the start of the last war. This was the only Public service. Replace it & the airport will thrive
The airport will always be a failure until the Shoreham Airport Halt Station is put back again. Removed for security at the start of the last war. This was the only Public service. Replace it & the airport will thrive
Posted by: jayne, hove on 11:59pm Wed 26 Mar 08
The then labour incompetent council should never have sold it so cheaply, if they had sold for its true value there should have been a more competent company to buy it, instead they did a deal. now not even the residents of b and h or worthing have anything to show for it. the airport itself needs a sensitive refurb, but i will not be disappointed not to see flats etc. this greedy company that decided to charge for parking, even to the pilots and staff, who pay extortionate landing and hangering fees anyway, deserve what they get.
The then labour incompetent council should never have sold it so cheaply, if they had sold for its true value there should have been a more competent company to buy it, instead they did a deal. now not even the residents of b and h or worthing have anything to show for it. the airport itself needs a sensitive refurb, but i will not be disappointed not to see flats etc. this greedy company that decided to charge for parking, even to the pilots and staff, who pay extortionate landing and hangering fees anyway, deserve what they get.
Posted by: Doris on 4:35am Thu 27 Mar 08
Aren't you glad you are not a shareholder?[bold]bold[/bold]
Aren't you glad you are not a shareholder?
Posted by: Jake, Lancing on 12:35pm Thu 27 Mar 08
Shoreham airport is just bursting with potential, just someone please do something about it! For a start, decent resturants/cafes would make a great difference
Shoreham airport is just bursting with potential, just someone please do something about it! For a start, decent resturants/cafes would make a great difference
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