TRAVEL group Minoan has abandoned plans to raise £1 million through a broker offer after it failed to generate enough interest from investors.
The chairman of the Glasgow-based business, Christopher Egleton, said the lack of interest in the broker offer was “not what we expected”, citing the close proximity to Christmas for the lacklustre response.
He said there were other sources of finance available but it “would have been convenient” to complete the offer.
And Mr Egleton revealed the group was considering the sale of its travel and leisure business because the market value of the business does not reflect the value of its assets.
Minoan owns land on Crete where it plans to build a luxury development, but the group has faced a decade of legal and political delays on the project.
Minoan on Monday revealed plans to raise £1.3m through a share placement and broker offer. It planned to use the funds as working capital and to pay down debt. The £300,000 placement was successful, with the 6p per share offer representing a 21 per cent discount on the market price.
Referring to his statement on Monday, in which he said the group was streamlining its working capital requirements and cost base, Mr Egleton commented: “you might imagine we’re clearing the decks to do something.”
The mooted sale of its travel and leisure division, which includes a number of acquired businesses consolidated into Stewart Travel, comes just months after chairman Christopher Egleton said the group remained acquisitive.
The travel and leisure business, which is headed up by former Direct Holidays chief executive Duncan Wilson, generated transaction volume of £68m in the year to April 30, helping the company to a gross profit of £4m.
The value of the land on which the Crete development will be built is valued at about €100m.
“It is clear that the market was not giving us credit for the value of the [Crete] site, because the market finds it difficult to value revenue-based businesses and asset-based businesses,” he said.
“If the market gave us credit for their combined value I think [running both operations] would be a thing to do, but if you look at our capitalisation at any time over the last three months, the capitalisation is nothing like the value of the assets, so you have to make a decision as a board.”
In May this year Minoan acquired Edinburgh-based Morningside Travel, consolidating the business into a division which includes Cruise Kings, Scotland’s Cruise Centre, Ski Kings and Golf Kings. Then in June the Greek Government cleared the final objection to the Crete project, in which Minoan plans to develop a 6,000 acre site on the Cavo Sidero peninsula on the North Eastern coast of the island.
“We made a decision that we wanted to grow the travel business, which we’ve been doing, slower than we would have perhaps liked but we were doing very well,” said Mr Egleton.
“Along comes the Presidential Decree in June, and having spent all summer cheering to the rooftops being very pleased, because it crystallised the value, [but this] wasn’t reflected in the stock market, the board had to make a decision on which way to jump.”
Mr Egleton said while the board was weighting up its options, “out of the blue” it received the offer for the travel business, which is now under discussion.
The Crete plans include a luxury resort which will incorporate hotels, golf courses and a marina, with build costs estimated to be in the region of £300m.
The perennially-delayed Crete project was first granted permission in 2007 but has faced numerous legal and political obstacles. The project was signed off by eight Government departments before being granted a Presidential Decree in March 2016, which was subsequently challenged.
In June, Minoan extended a £5m loan facility with Jersey-based Hillside International Holdings.
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