Troubled property services company Erinaceous this morning said its borrowing was at an unsustainable level and one possible solution was a debt-for-equity swap.

It is probable that existing shareholders will see the value of their holdings significantly diluted as a result of any refinancing proposal, the company said in a statement on the preliminary findings of its strategic review.

Erinaceous blamed its woes on the rapid expansion under the previous management team, which was headed by founders Neil Bellis and Lucy Cummings, who departed earlier this month. It said its bankers ‘remain supportive’.

It added that its efforts would be focused on ‘building value’ in its property services and insurance businesses. It also announced that chairman Nigel Turnbull, who took on an executive role in September, would revert to the role of non-executive chairman immediately.

The company's share price has dropped almost 96% so far this year, closing last night at 14p, giving it a market capitalisation of £15.3m.