TRAVEL group Minoan has acquired independent Edinburgh business Morningside Travel through the issuing of new shares, which have also allowed it to raise working capital.

AIM-listed Minoan has issued 6,200,000 new shares, five million of which have been placed with institutional and other investors, raising £450,000.

The acquisition values Morningside Travel at £135,000 of which £110,000 is to be settled by the issuing of shares.

The business, which was owned by Raymond McLellan, will become part of Minoan’s Stewart Travel arm.

Minoan – which is embroiled in a long-running saga over its plans to develop a luxury resort on Crete – placed the shares at 9p per share, a 6.45 per cent discount on Friday’s closing price.

In addition to providing working capital, the net proceeds of the placement will support the development of the group, including its project in Crete. The cash may also be drawn upon for further acquisitions.

Both deals mean 6,204,400 new ordinary shares will be admitted to the market on May 26, taking the total shares issued to 211,461,868.

WH Ireland advised on the acquisition and placing, with the assistance of Daniel Stewart & Company.

In the year to October 31, Minoan’s travel and leisure business grew transactions by 11 per cent to £68m, but operating profits fell to £272,000 from £387,000 because of increased depreciation charges.

In March 2016 the group received a Presidential Decree, permitting work on the Itanos Gaia project in Crete, but this has been delayed by appeals to Greek Council of State, which were heard by the Greek Supreme Court in September. A final ruling has yet to be made by the court, but Minoan has repeatedly declared its confidence that the project will come to fruition.

The company also said discussions were ongoing with Hillside International Holdings over an extension of its existing loan facility, which expires on June 30.