Shares in fruit and vegetable distributor Fyffes rose by over 6% today after it said it intends to establish a new, separately quoted property company. Bluestone Properties will have initial assets of about €200m and a portfolio of 25 properties.
In a statement this morning, the company said that Fyffes' shareholders will directly own 60% of Bluestone. Fyffes will spend €80m to acquire the remaining 40% of the company, which will use part of the cash to repay the €60m of debt transferred with the properties.
The remaining €20m in cash, combined with properties' market value of €180m, will give Bluestone its net asset value of €200m or, for Fyffes shareholders, 57 cents per share.
The establishment of the company will require the approval of shareholders. That will be sought at an extraordinary general meeting next March and if it gets the go ahead, the new company will be floated on London's AIM and Dublin's IEX.
Fyffes said it had recently commissioned independent valuations of its properties, mainly in Ireland and the UK. The valuers determined that the 25 properties involved have a current market value of about €190m, compared to a net book value of about €110m.
Fyffes said it believes that shareholder value can be enhanced by de-merging the group's property activities, including associated debt, from its fresh produce business.
The company said the de-merger and the subscription for equity in Bluestone will reduce Fyffes' total net assets by about €40m, including its net cash by €20m. Fyffes still own a number of other properties, mainly in continental Europe, with a net book value of about €70m. These properties are in the process of being revalued.
The chairman of Bluestone will be Fyffes chairman Carl McCann, and its managing director will be Robert Knox, who currently heads its property business.
Fyffes shares closed up 13 cent at €2.26 in Dublin.
