Airport plans at risk as owner runs into trouble

8:53pm Tuesday 25th September 2007

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The multimillion-pound redevelopment of Shoreham airport was in doubt tonight as troubled owner Erinaceous remained in emergency talks with its lenders.

The property group, which bought the airport from Brighton and Hove City Council and Worthing Borough Council for £8 million last year, has debts of £140 million.

Now Croydon-based Erinaceous is locked in discussions with its banks after breaching credit agreements and has delayed announcing its half-year results.

A company spokesman said no announcements would be made about Shoreham airport until the results were released, which is likely to be on Friday.

In a statement, the company said: "Discussions with lenders have not yet concluded but are continuing. The board of Erinaceous now intends to announce its interim results as soon as possible but in any event no later than September 28 (Friday)."

Erinaceous' plans for the historic airport - which include building hangars, offices, a fire station and control tower, and an overhaul of the Art Deco terminal building - are expected to create around 200 jobs.

But the project has been beset with problems.

The company was given an August deadline to address Highways Agency concerns about access from the A27 but that has been pushed back until the middle of November.

A further snag arose when a hangar dating back to the Second World War, which had been earmarked for demolition, was given listed status at the eleventh hour.

Erinaceous must now seek special permission to tear down the municipal hangar, which was given Grade II listed status because of its distinctive roof which, according to government inspectors, represented "contemporary interwar trends".

Meanwhile, the company's plans to build flats at the airport - the first scheme of its kind in the country - were scrapped after objections from English Heritage.

So far the problems at Erinaceous have not affected the airport.

Airport manager John Haffenden said: "As far as we are aware we are totally unaffected by the issues at Erinaceous. It's business as normal here. That's all there is to say."

Erinaceous offers architectural and design services, project management, building maintenance and the collection of ground rents and service charges.

The firm's shareholders - who once saw the company valued at £400 million - are said to be baying for blood. A cull of senior management is now expected after the departure of several key personnel since takeover talks collapsed five months ago.

Founder and chief executive Neil Bellis's position is said to be under threat along with that of chairman Nigel Turnbull, a businessman previously charged by the Government with shaking up British corporate governance.

Shares in Erinaceous, which have been hit by expansion and a fraud at one of its subsidiaries last year, are now trading at around 55p - down 88 per cent from the start of the year - giving the company a market value of about £85 million.