New Frontier Properties to stay listed for now


New Frontier Properties to stay listed for now


Published Date: 2019-12-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

New Frontier Properties to stay listed for now

The struggling property fund says its lenders want it to remain a listed entity as it repays debt through property disposals.

New Frontier Properties has scrapped plans to delist from the JSE and the Stock Exchange of Mauritius (SEM) as the exchanges were unable to assist and its lenders indicated they wanted it to remain listed. And while its banks have relaxed debt covenants after a fall in the value of its properties resulted in a breach of its loan-to-value covenants, it says it still needs more capital.

New Frontier has a negative net worth of £44.20 million due to a decline the valuation of its investment properties. It doesn't believe this will be reversed in the short term.

The fund's shopping centres in the UK have been severely impacted by retailers going into company voluntary arrangements (CVAs) and receiverships. It expects more to come, as well as company administrations, with challenging conditions likely to continue to impact the market and its business over the next year.

HSBC signed an amendment taking the group out of its default position by resetting its debt covenant levels including removing the loan-to-value covenant. It said it would continue to work with HSBC to realise the value in its assets and repay the outstanding loan. Delisting from the JSE and the SEM would have helped reduce its costs, it said. In the meantime, both its lenders have trapped the group's free rental cash flow and are releasing funds to cover its operating expenses and capital expenditure to support letting activity. Surplus funds are being used to service outstanding loans. Its Houndshill Shopping Centre in Blackpool was sold after it couldn't repay a loan to Deutsche Pfannbriefbank, which held the centre as security.

At the end of August, the groups assets were valued independently at £119 million which it said represented a significant reduction in the value of its UK shopping centre portfolio of £68.4 million. Total assets were worth £122 million, while liabilities reached £166 million. Rental income for the year declined by 13% to £14.7 million and it reported a loss of £68.5 million. It's not paying a final dividend as it has no distributable reserves.

In July, Rebosis Property Fund wrote off its investment in New Frontier after selling its 49.35% interest for just R700 and impairing the R354 million carrying value.

Its shares didn't trade yesterday, closing unchanged at 42c.


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