Erinaceous falls victim to property slide

LONDON (Reuters) - Property services firm Erinaceous Group (ERGP.L) said on Monday it had entered administration after creditors pulled out of talks to refinance the stricken firm's mounting debts.

The company, which invested millions of pounds on a spree of corporate acquisitions close to the peak of the UK commercial property market, blamed perilous property and capital market conditions for its loss of lender support.

It said it had "vigorously explored" all alternatives to administration, including the possibility of conducting corporate disposals and an equity raising, but it could not reach agreement with lenders, prompting the appointment of KPMG as administrators.

"The Board has continued working with the Company's lenders with the objective of maximising the Group's value and keeping it as a going concern. Until very recently, the Board was hopeful that it would be successful in this aim," a statement said.

KPMG expect to sell the insurance division of the group, Erinaceous Insurance Services Limited, to a company owned by creditors, Erinaceous said.

The residential management division and property maintenance division of Erinaceous are outside of any insolvency process and continue to trade as normal.

One property analyst described the company's descent into administration as "little more than a foregone conclusion" after a slew of negative newsflow -- including the company's breach of credit agreements and possible fraud investigations at one of its subsidiaries -- sent the stock tumbling by around 100 percent in the last 12 months.

Chief executive Neil Bellis and Chief Operating Officer Lucy Cummings left the firm in November after activist hedge fund shareholder Fursa Alternative Strategies called on the pair to explain the company's precarious financial position or resign from their posts.

Former chairman Nigel Turnbull, author of the influential Turner Report on corporate governance of companies resigned from his post in early February, just weeks before a protracted strategic review concluded that Erinaceous' ordinary shares were virtually worthless.

(Reporting by Sinead Cruise, editing by Elizabeth Fullerton)