Balmoral shareholders endorse plan to delist and form new company

SHAREHOLDERS IN Balmoral have endorsed the company’s plan to delist from the Irish ESM and London AIM “junior” exchanges and form a new company, Balmoral Holdings.

Approximately 99.5 per cent of shareholders voted yesterday to back the restructuring proposal, which will result in Balmoral, formerly known as Blackrock, delisting from both stock exchanges on September 2nd.

Speaking at the company’s extraordinary general meeting yesterday, Balmoral chairman Carl McCann said the company decided to instigate the restructuring because of the difficulties in accessing new debt finance.

“It is quite probable that unless markets improve, any new medium-term or longer-term loan facility for Balmoral will be a figure lower than the level of our current borrowings.”

As a result it was planning to raise new equity to make up the balance. Mr McCann said the company wanted to have the equity finance in place before discussions on refinancing began to procure the largest amount of loan finance on the best terms available.

Creating the new corporate structure in advance of the equity finance could speed up the process by six or 12 months, he added.

Mr McCann said it would be “premature” to comment on the expected level of interest in equity raising. “Unless a very convincing case is made, people will not put forward new equity and I don’t think we’re at the point yet where we are in a position to do that.”

Balmoral, the property company which was spun-off from Fyffes in 2006, has seen its share price plummet as a result of the property collapse and is in breach of some of its loan covenants. Its shares have been trading around the 1.5 cent mark, having traded at highs of about 40 cent when the company floated five years ago.

Fyffes is a 40 per cent shareholder while a company controlled by O’Flynn Construction controls 14 per cent.

Some shareholders yesterday questioned the rationale behind the restructuring plan. One, John Flynn, said the company should be “closed down straight away” and that it would be in the same position this time next year.

Others said the restructuring was the best possible option. “If we close the company we get nothing,” said one. “If it continues to exist, at least you’ve a chance of getting something.”

The carrying value of Balmoral’s investment property assets fell from €237.1 million at the end of 2009 to €208.8 million at the end of 2010. Net borrowings at the end of last year amounted to €180.5 million.

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

Balmoral is due to publish results for the first half of 2011 next week.