Sale of insurance division set to conclude
Embattled property services group Erinaceous has gone into administration after failing to reach an agreement with its lenders and creditors.
In a statement the group - which includes insurance broker EIS - said that despite exploring all available strategic options, including refinancing, options for sale and the raising of equity, no agreement had been possible given the extent of the challenges facing the group and the current state of the capital markets.
Administrators from KPMG expect to execute the sale of EIS, which controls £160m GWP, to a company owned by the company's lenders. Erinaceous' bankers are HBOS, Lloyds TSB and HSBC.
The news comes hours after the FSA suspended trading its shares at the company's request. Over the past year, Erinaceous' share price has fallen from 383p to 1.6p, giving it a market capitalisation of just £1.7m - down from £410m at its peak.
The development concludes months of uncertainty about the future of the company. In September the group delayed the release of its interim results and revealed it had breached its banking covenants. The group's current debt stands in excess of £250m.
In January, the group announced it was taking offers for EIS after it had received approaches from a range of private equity, insurer and broker sources. At the time, sources said that the company was looking for a price in excess of £100m - a figure widely disputed by analysts and other sources close to the company. Last month, discussions between leading suitor Zurich and EIS appeared to break down over price.
