Eason puts €30m stores into new property vehicle
Shareholders to vote on plan to split company
EASON, the books and stationery retailer, plans to hive off property worth €30m into a new vehicle, making it easier to release value in the 127-year-old company in the future.
In a letter to shareholders, chairman James Osborne said a vote to split the company into an operating company and a property company would be put to them at an extraordinary general meetings on November 12.
"The proposed restructure will streamline the group structure for future property and or trade disposals were these options to be considered by the board / shareholders at a future point in time," Osborne said in a letter to shareholders on October 18.
The former chairman of Independent News & Media added that splitting the business in two would provide "asset protection" by "ring-fencing" the equity in its properties from its trading businesses in both the Republic and Northern Ireland.
Shareholders have previously expressed frustration that the company's structure is too inflexible to unlock the full potential value of the firm.
Eason appointed BDO, the accountants, in June to produce a 16-page report for its 239 shareholders on its proposed corporate restructuring in response to these shareholders' concerns.
"It is generally agreed that [the present group structure] is no longer optimal and that the shareholders would benefit if the present group structure were reorganised," Osborne told shareholders.
The five properties Eason proposes putting into the new company are on O'Connell Street, Dublin; Tallaght; Patrick Street, Cork; Shop Street, Galway; and O'Connell Street, Limerick. These properties have a net book value of €29.5m. Eason owns other properties but these are not, at this stage, being put into the new property company.
Eason made an overall profit of €2.6m last year following a loss of €5.3m the previous year after the group under managing director Conor Whelan implemented a tough cost-reduction plan. Group turnover fell by 8 per cent to €245m and costs were cut by €6.1m in July 2012 by letting go staff and shutting underperforming shops.
In July 2013, Eason lost the contract to run shops in Dublin Airport's Terminal 1, giving its British-owned rival WH Smith complete control of books and magazines sales in both T1 and T2. The move is seen as a big loss for Eason in the industry.
When WH Smith unveiled a 6 per cent rise in pre-tax profits to £108m for the year to August 31 earlier this month, it cited its business in airports as among the biggest factors fuelling its growth. WH Smith is seen as a potential long-term buyer of Eason. The property aspect of Eason's business has until now, however, deterred potential purchasers of one of the country's best known brands.