Equable Properties, the Aim-listed company run by property tycoon Desmond Bloom, has breached banking covenants on the debt securing a portfolio of pubs.
Equable, which was listed on Aim in March 2007, is now set to be taken over by Peter McCann, who owns Kelford Estates. Equable Properties has been in breach of covenants attached by HSBC on a mortgage to buy 10 pubs.
The Morning Advertiser understands that the pubs were previously sold at public auction and leased back to discredited pub company Provence, which went into administration in November 2006.
Equable acquired the pubs from a company called The Bervies for £4.6m in cash and shares at an 8% initial yield.
"The pubs proved to be not a good buy," Bloom told Property Week. "The [smoke] ban has had a big effect. Pubs are unable to pay the full rent, so the income covenant has fallen below the ratio .
"However, we have enough cash for six months. It is not a serious breach — the indications are HSBC will waive the covenant."