Balmoral property company plans to delist in restructuring

SHARES IN property company Balmoral International Land, formerly Blackrock International, are to be traded on a grey market if a plan to restructure the company is passed by shareholders.

Yesterday, Balmoral announced plans to delist from the ESM and AIM “junior” exchanges in Dublin and London respectively and establish a new group holding company, Balmoral Holdings, which will hold all of the ordinary shares in the company.

The Fyffes spin-off, which is in negotiations with lenders about its debt, said a “new unencumbered group” is needed to facilitate the raising of further equity. It plans to enter the new company on a publicly quoted market “as soon as this is practically feasible in the future”.

The immediate effect of the delisting will be that shares will be traded on a grey market administered by Davy Stockbroker.

The deal, which needs to be approved by 75 per cent of shareholders at an egm on August 25th, will see shareholders receive one new share in Balmoral Holdings for each existing Balmoral International Land share held.

Some 40 per cent of the company’s share capital is held by Fyffes, while a company controlled by O’Flynn Construction controls 14 per cent. Balmoral’s shares have been trading around the 1.5 cent mark, having traded at highs of about 40 cent when the company was spun out from Fyffes and floated in 2006.

The collapse in shareholder value reflects the decline in the property market. Balmoral has interests in more than 60 properties in Ireland, Britain and Europe. Fyffes and Total Produce are responsible for about 30 per cent of Balmoral’s rental income.

The restructuring is connected with the company’s loan repayments. Net borrowings at end-2010 amounted to € 180.5 million. Approximately €130 million of this is subject to a loan-to-value covenant of 50 per cent.

The year-end ratio of group net borrowings to group property was 84.5 per cent according to the company’s accounts and Balmoral is now in breach of those covenants.

In its 2010 accounts, Balmoral said the carrying value of its investment property assets fell in value from € 237.1 million at the end of 2009 to € 208.8 million. Net assets at end-2010 stood at € 30 million compared to € 60.3 million in 2009, giving net asset value per share of € 0.0514 compared to € 0.1032 previously. In a trading update yesterday Balmoral indicated a further deterioration.