Fyffes has announced its intention to set up a new, separately quoted property company, Bluestone Properties plc, with initial net assets of approximately €200 million.

Fyffes’s shareholders will own 60 per cent of Bluestone, corresponding to €120m of book value, equivalent to €0.34 a share.

Fyffes will own the remaining 40 per cent of Bluestone, representing €80m of book value, equivalent to €0.23 a share. In aggregate, the proposal has the potential to create value for the group’s shareholders equivalent to €0.57 per existing Fyffes share.

Bluestone, a debt free company managed by a highly experienced property team, will have the capacity to develop its portfolio and to pursue new opportunities on a significantly greater scale.

Fyffes has recently commissioned independent valuations of certain of its properties, mainly in Ireland and the UK. The valuers have determined that the 25 properties involved have a market value of approximately €19m, compared to a net book value of approximately €110m.

Fyffes said in a statement it believes that shareholder value can be enhanced by de-merging the group’s property activities, including associated debt, from its fresh produce business. It intends to seek shareholder approval to transfer these properties into Bluestone, which will initially be owned by Fyffes’ existing shareholders. It is proposed that, immediately thereafter, Fyffes will subscribe €80m to acquire a 40 per cent shareholding in Bluestone, the latter using part of this cash to repay the €60m debt transferred with the de-merged properties.

Following the de-merger and subscription by Fyffes, Bluestone will have an initial net asset value of €200m, comprising properties of €180m (net of deferred tax of €10m) and net cash of €20m. The Group’s shareholders will own 60 per cent of Bluestone, corresponding to €120m of book value, equivalent to €0.34 per share. Fyffes’ 40 per cent stake in Bluestone will have a book value of €80m, equivalent to €0.23 a share. The combined net asset value attributable to each existing Fyffes shareholder will therefore be approximately €0.57 a share.

It is intended that Bluestone will be listed on the AIM market in London (AIM) and IEX in Dublin. Davy will be appointed nominated adviser and broker to Bluestone.

Fyffes will enter into arm’s length lease agreements for the properties which it currently uses in its fresh produce business. The related rental commitments (net of the operating costs of the properties to be assumed by Bluestone) are expected to reduce Fyffes’ annual adjusted earnings per share by approximately €0.008 per share.

The de-merger and the subscription for equity in Bluestone will reduce Fyffes’ total net assets by approximately €40m, including its net cash by €20m. Fyffes will continue to hold other properties, mainly in Continental Europe, with a net book value of approximately €70m. These properties are in the process of being revalued.

The chairman of Bluestone will be Fyffes chairman, Carl McCann, and its managing director will be Robert Knox, who has been with the Group for 13 years and heads its property business. Alan White, a director of Lenborough Consultants, a UK property consultancy, and formerly property director of British Telecom, has agreed to become a non-executive director. It is intended that independent non-executive directors will comprise the majority of the Board of Bluestone.

Detailed documentation in relation to the de-merger plan will be posted to shareholders in March 2006 in advance of an EGM, subject to all necessary regulatory and other approvals being obtained in the meantime.

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