Shopping centre-owner Intu has cancelled an emergency fundraising after it was unable to persuade enough shareholders to put money into its business.
Its shares crashed 38 per cent this morning to 6p following the announcement, before recovering to 9p – down 15 per cent on last night’s close.
The company last month said it was seeking to raise £1bn to £1.5bn from investors to fix its balance sheet.
However, today Intu said following discussions with new and existing investors it “has concluded it is unable to proceed with an equity raise at this point”.
Intu said: “Current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business and Intu was therefore unable to reach the target quantum at the current time.”
Intu the red: Can landlord keep going?
Neil Wilson, chief market analyst at Markets.com, said: “This casts doubt on the future of the business.”
Intu said it had “received several expressions of interest to explore alternative capital structures and asset disposals” during the attempted fundraising.
The company said it will “continue and broaden its conversations with its stakeholders with a view to discussing the range of options available to the Company to demonstrate the equity value of the business and to utilise its assets to provide further liquidity.”
It said these included alternative capital structures and further disposals.
Intu said it will also continue to “keep under review the feasibility of an equity raise”.
‘Wrong business, wrong time’
Analysts at Liberum said: “July 2020 becomes the next key testing date for covenants; if breached, we expect banks will start taking control with further negative implications on larger UK shopping centre values, unless mitigating actions can be taken.”
“No one wants a piece of shopping malls – no real surprise, the current financial market conditions are hardly helpful either. Wrong business, wrong time,” Wilson said.
Intu also provided a trading update today ahead of the publication of its full year results on 12 March.
It said like-for-like net rental income was down nine per cent for the year,
Intu said it was due to repay or refinance £189.7m of borrowings over the next 12 months.
Landlord risks breaching debt levels
It said there is a risk it could breach its debt covenants in July. It said it would take mitigating actions. including waivers, to deal with any covenant breaches.
Chief executive Matthew Roberts said: “We will face further challenges in what has been an extraordinary few months for intu and the wider sector, but I am confident that we will face these head on and emerge a leaner, fitter and more focused business.”
Intu owns 17 shopping centres in the UK, including the Trafford Centre in Manchester and Lakeside in Essex.
It has been hit by a string of failures in the retail sector and tough negotiations over leases with struggling retailers looking to reduce costs.