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Flying Brands sells property asset to pay down debt

Struggling home shopping retailer Flying Brands has confirmed the disposal of a building on the island of Jersey today, as it attempts to pay off its £1.7 million banking loan.

Jersey-based property developer JAJ Properties has agreed to pay £2.1 million in cash and ten per cent in any eventual development profits to the multichannel retailer for the Retreat Farm premises which is currently unutilised office space.

Last week the Flying Brands admitted that it could breach its banking covenants due to poor trading, despite only renegotiating the terms of its loan facility in April of this year.

A statement from the firm read: “The property is surplus to the requirements of the company and incidental to the activities of the business and the proposed sale will not in any way affect our growing and dispatch operation that is carried out from nearby but separate properties.

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

A £500,000 deposit, refundable in the event of conditions not being satisfied, has already been paid by JAJ for the site which has a current book value of just £400,000.

The two companies are connected by Jonathan Ruff who, along with being a substantial shareholder in JAJ, was a director of Flying Brands subsidiary Dealtastic Holdings for three months until January of this year.

Flying Brands has already informed its shareholders of the deal and hopes to complete the transaction by next month.

Today’s statement continued: “The proposed sale and repayment of our term loan would significantly improve our balance sheet. We continue to explore ways of maximising the value of our remaining property assets.”

Like-for-like sales for Flying Brands first quarter period ending in April showed a decline of 19.8 per cent year-on-year.

Source: Jon Whiteaker - Retail Gazette

26 September 2011
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