Hammerson to reduce debt with rights issue, disposal

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Hammerson to reduce debt with rights issue, disposal

Published Date: 2020-08-07 | Source: Stephen Gunnion | Author: Stephen Gunnion

Hammerson to reduce debt with rights issue, disposal

The shopping centre owner will ask shareholders for more cash to reduce debt and strengthen its defences against Covid-19.

Hammerson plans to proceed with a rights issue and the sale of almost all its interest in VIA Outlets so it can pay down debt, strengthen its financial position and provide liquidity as it refocus its property portfolio on flagship destinations in the UK and Ireland.

The shopping centre owner wants to raise £552 in the cash call. Together with proceeds from the sale of its 50% stake in VIA to a mutual fund managed by joint-venture partner APG Asset Management, it would raise gross proceeds of about £825 million (R18.8 billion). It said it was pro-actively taking measures to deal with the substantial impact on its business driven by major structural changes to the retail industry, which had been exacerbated by the effects of Covid-19. Its two largest shareholders, APG and Lighthouse Capital, had given irrevocable undertakings to take up their rights in full.

The announcement came as the group reported a sharp decline in earnings for the six months to end-June and withheld an interim dividend due to the impact of Covid-19, which forced it to close shopping centres and make provisions for reduced collections partly due to amended rental agreements and deferments. Net rental income fell 44% to £87.3m million and adjusted profit dropped 84% to £17.7 million. Adjusted earnings per share declined by 84% to 2.3p. Its loss tripled to £1.09 billion, from £320 million previously, and its basic loss per share widened to 142.2p from 41.8p, including portfolio non-cash revaluation losses of £939 million.

The company said it would use the net proceeds of about £794 million from the transactions to reduce outstanding net debt to £2.2 billion on a pro forma basis from the current £3 billion, while its loan-to-value would decide to 41.7% from 51%.

It also planned to overhaul its leasing model to introduce a structure that would include more flexible leases, establish a more affordable base level lease and a new rent review system.

Its shares fell 16% to R10.61 yesterday.





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