Managers at a host of consultancies plot buyouts from failed property services company
A host of consultancies bought by failed property business Erinaceous as part of its ill-fated acquisition spree are expected to complete management buyouts from the firm within days.
The listed consultant – whose name means hedgehog-like – went into administration this week with debts of more than £220m. It has emerged that some practices it owns have been working on rescue packages with their existing managers since late last year, when the signs were growing that Erinaceous was in serious trouble.
Among those understood to be in advanced talks over buyouts as Building went to press on Wednesday are managers at John Nolan, bought for £12.6m in November 2006, Rose Project Services, bought for an undisclosed sum in May 2006 and Francis Graves, bought for £7m in September 2005.
Sources close to the situation said architect Leach Rhodes Walker and Sheffield-based consultant Monaghans were also likely to seek buyouts.
Records at Companies House show that management at some firms, including Nolan and Rose, set up additional companies at the end of last year, at a time when problems at Erinaceous were escalating.
It is understood that these new firms are likely to be used as vehicles to buy back the businesses, many of which were established names in consultancy before being acquired by Erinaceous during its seven-year expansion drive.
It has not been possible to reach an agreement with lenders Erinaceous statement.
The company, which is listed on the stock exchange, appointed KPMG as administrator on Monday after failing to develop a rescue package that would have pulled it out of recent difficulties. It posted a pre-tax loss of £3.9m for the six months to 30 June 2007, by which time its debts had mounted to more than £220m.
In a statement, the company said: “Given the extent of the challenges facing the group and the state of the capital markets, it has not been possible to reach an agreement with lenders and other creditors.”
The company’s profitable insurance arm, Erinaceous Insurance Services, was sold on Tuesday to a company owned by the firm’s creditors.
Northern property services firm Eddisons has bought Erinaceous’ property management, facilities management and landlord and tenant teams.
The residential management division and property maintenance division remain outside of the insolvency process and continue to trade as normal.
The death of Erinaceous
1999 Company formed, taking a name that means hedgehog-like. Buys more than 25 firms in seven years, resulting in a turnover of more than £114m
28 March 2006 Reveals that the Serious Fraud Office is investigating a case involving allegations of fraudulent property valuations at Dunlop Haywards, an Erinaceous subsidiary
7 August 2007 In talks with a mystery bidder, believed to be HBOS, over taking the company private. Board announces three weeks later
that talks have broken down. Share price above 300p.
27 Sept 2007 Reveals a pre-tax loss of £3.9m for the six months to 30 June. Erinaceous announces strategic review of the business. Neil Bellis, the
chief executive, to step aside and become deputy chairman.
20 November 2007 Bellis and Lucy Cummings, the chief operating officer, resign as directors. They receive a total of £736,000 in pay-offs
25 March 2008 Board tells the stock exchange that the company’s shares are virtually worthless, regardless of any possible rescue plan
14 April 2008 Shares suspended at 1.65p. KPMG appointed administrator