Debt burden at Flying Brands is eased by sale

FLYING Brands, the Jersey-based mail order firm in which Scottish entrepreneur Sir Tom Hunter holds a major stake, yesterday addressed its debt worries by selling property to a developer.

The retailer – which ships audiobooks, flowers and gardening supplies through the post – warned on Friday that it would fail a banking covenant test next month following poor trading but said it was in talks to sell excess premises.

Those discussions came to fruition yesterday when Flying Brands said it will dispose of part of its Retreat Farm site in Jersey for £2.1 million in cash. The property had a book value of £400,000 and Flying Brands will be entitled to 10 per cent of any eventual development profits.

Jonathan Ruff, a substantial shareholder of JAJ Properties, which is buying the premises, was a director of Dealtastic, a Flying Brands subsidiary, from 22 October 2010 to 18 January.

The retailer said the property being sold off included staff accommodation and “unutilised office space”, neither of which generated any profits.

Flying Brands said: “We intend to use part of the proceeds to pay off our existing term loan from our bank of £1.7m and the remainder for general working capital purposes. We expect our existing overdraft facility with our bank to remain in place.

“The proposed sale and repayment of our loan would significantly improve our balance sheet. We continue to explore ways of maximising the value of our remaining property assets.”

The firm is understood to have substantial property resources on Jersey.

Hunter took a 29.9 per cent stake in 2006 for £23.6m via his West Coast Capital investment vehicle. He abandoned a takeover attempt in 2008.