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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 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 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.

miles.godfrey@theargus.co.uk

11:08am Thursday 27th March 2008

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