intu slumps as Link shuns recapitalisation


intu slumps as Link shuns recapitalisation

Published Date: 2020-02-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

intu slumps as Link shuns recapitalisation

The shopping centre owner says it remains engaged with shareholders and potential new investors after the Hong Kong REIT withdrew.

intu Properties' shares fell as much as 37% yesterday after it said a prospective cornerstone investor had backed out of a proposed capital raise. The decline wiped out Monday's 24% rise when the shopping centre owner confirmed weekend reports that it was in discussions with large shareholder Peel Group and other new investors. The Times reported that intu planned to rise £1 billion in the emergency cash call to help reduce debt.

In an update to its proposed capital raise, which it will outline alongside its annual results later this month, intu said Link Real Estate Investment Trust (REIT) no longer planned to participate in the recapitalisation of the company. Hong Kong-based Link is Asia's largest REIT.

This is not the first time that potential investors have walked away from intu. Peel Group was among a consortium of investors including Saudi conglomerate The Olayan Group and Canary Wharf owner Brookfield Property Group that abandoned a takeover of intu in November 2018 due to the weak fundamentals for UK retail property. Earlier in 2018, fellow shopping centre owner Hammerson scrapped a £3.4 billion takeover of intu, saying the opportunities it previously saw for value creation had diminished.

intu's shopping centres have been affected by a number of retailers entering administration and company voluntary arrangements (CVAs), putting downward pressure on rentals. It has already warned of a big decline in rental income for its 2019 financial year and said it was considering all options to deal with its short and medium-term liquidity requirements, including disposing of assets and raising equity. It didn't pay an interim dividend for the six months to end-June in order to preserve cash.

Its shares closed 33% down at a new low of R2.15 yesterday.

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