Fruit importers Fyffes is to ask shareholders to approve the transfer of €200 million worth of the group's property assets into a new, separately quoted property company, Bluestone Properties. Siobhán Creaton, Finance Correspondent, reports.
Fyffes shareholders will directly own 60 per cent of Bluestone, which will contain a debt-free portfolio of 25 properties, the equivalent of 34 cent per share, the company said yesterday.
Shareholders will be notified of an extraordinary general meeting in March. If approved, the group intends to list Bluestone on London's AIM market and the IEX market in Dublin. Davy will act as its broker and adviser.
Fyffes said it believes the de-merger of the group's property activities from its fresh produce business will enhance shareholder value. The company has previously warned shareholders that it faced "significant challenges" in the future. It must pay a €40 million increase in duty costs due to reform of the EU banana regime while higher shipping and fuel costs will cost the group a further € 15 million next year. It is also assessing the impact on the market of the elimination of quotas on banana volumes imported from Latin America.
Fyffes shares closed 13 cent higher at €2.26 in Dublin yesterday following the announcement.
It is proposing that Fyffes's current shareholders will initially own Bluestone. Immediately thereafter it said that Fyffes will subscribe €80 million to acquire a 40 per cent stake in Bluestone. These funds will be used in part to repay the €60 million debt transferred with the de-merged properties.
Fyffes's 40 per cent stake in Bluestone will have a book value of €80 million, equivalent to 23 cent per share. The combined net asset value attributable to each existing Fyffes shareholder will be approximately 57 cent a share, it said.
The company will continue to hold other properties, mainly in continental Europe, with a net book value of €70 million. These properties are currently being revalued.
Fyffes chairman Carl McCann will become chairman of Bluestone. Robert Knox, who has managed Fyffes's property business for 13 years, will be appointed managing director. Alan White, a director of Lenborough Consultants, a UK property consultancy has agreed to become a non-executive director.
It intends that independent non-executive directors will make up the majority of the board of Bluestone. Fyffes said that Bluestone will have the capacity to further develop its portfolio and to pursue new opportunities on a significantly greater scale.
It will enter into arms length lease agreements for the properties which it currently uses in its fresh produce business. Fyffes has recently commissioned independent valuations of some of its properties, mainly in Ireland and the UK.
Next week the High Court will rule on an insider dealing case taken by Fyffes against the industrial holding company DCC. Fyffes took the case against DCC and its chief executive, Jim Flavin, a former director of Fyffes, in relation to the 2000 sale of a € 106 million stake in the fruit firm.
