Fyffes to form property firm

FRUIT importer Fyffes plans to spin off its growing property portfolio into a separate company.

Fyffes has transferred its property assets to a new company, called Bluestone Properties, and will float the business on the Dublin and the London stock exchanges.

Fyffes said the new company will have net assets of around €200 million and no borrowings.

Shares in Fyffes, which fell earlier this week after the company said 2006 would be a tough year, gained over 6% yesterday.

Fyffes said spinning off Bluestone was the best option for both shareholders and the company.

“Bluestone, a debt-free company managed by a highly experienced property team, will have the capacity to further develop its portfolio and to pursue new opportunities on a significantly greater scale,” it said in a statement.

Over the past four years, Fyffes has netted €30m from property sales, including nearly €15m last year alone.

Fyffes’ chairman Carl McCann will head Bluestone’s board and Robert Knox, who runs the property business, has been appointed managing director.

The plan will have to be agreed by Fyffes shareholders at an extraordinary general meeting next March. If the demerger of Bluestone is approved, shareholders will own 60% of the new company and the rest will be held by Fyffes.

Bluestone holds 25 properties across Ireland and Britain, including the Edinburgh Fruit Market, which it plans to turn into an apartment and retail complex. These have recently been revalued from €110m to €190m.The demerger of Bluestone will reduce Fyffes’ total net assets by around €40m, including its net cash by €20m.

Fyffes has entered into lease agreements with Bluestone for several properties, which it currently uses for its fresh produce division. The cost of these leases will have a marginal impact on Fyffes’ earnings per share.

Fyffes added that it will continue to hold other properties, mainly in continental Europe, with a net book value of €70m. These properties are being revalued. Yesterday’s announcement is the second giveaway this week to Fyffes’ investors. The company plans to pay a special dividend of 5.72 cents a share following a bumper year of profits in 2005.

NCB Stockbrokers said: “The demerger prevents valuable property assets from being obscured or marked down by weak trading in fresh produce if left in the existing structure and removes the scope of a bid for the group aimed at releasing underlying high value property assets.”

Shares in Fyffes ended the day at €2.26, a gain of 13 cents.