Emergency action at Erinaceous

Chairman Nigel Turnbull will take an executive position and be responsible for the day to day running of the company.

Bellis, the company’s largest shareholder, will move aside to become executive deputy chairman with a responsibility for property transactions.

Finance director Michael Pearson will resign. Bellis’s sister-in-law Lucy Cummings will remain as chief operating officer.

The changes came as Erinaceous announced a pre-tax loss of £3.9m.

Turnbull blamed the company’s poor performance on being distracted by the various takeover talks the company has engaged in this year, with 3i, Consensus, Bridgepoint and HBOS.

‘This has been a demanding half year with management focused on evaluating the various approaches made by potential bidders and property transactions rather than running the business,’ Turnbull said. ‘The Management changes address this issue.’

Turnbull also said that the group would meet its expectations for the full year, but only if profits from property transactions were taken into account, a strategy which is thought to have angered shareholders in the past.

Turnbull also said that talks had been concluded with lenders HBOS, Lloyds and HSBC regarding breaches of Erinaceous’s banking covenants that occurred due to the company’s ‘poor trading’ during the period.

He said the banks had provided waivers for these breaches, but Erinaceous would now have to pay interest at a penal rate.

He said: ‘The Group will also undertake a review of the business, its assets and its strategy over the coming weeks, which will be independently reviewed on behalf of the banks.’

Auditor Deloitte qualified the results saying that if the support of the groups bankers could not be secured, trading did not improve and Erinaceous did not rely so heavily on property transactions, there was ‘significant doubt on the group’s ability to continue as a going concern’.