Intu Properties shares slumped more than 35% on Wednesday, after the owner of some of Britain’s largest shopping malls called off an emergency fundraiser claiming “extreme market conditions” l ‘had prevented raising its minimum target of £ 1.3bn from nervous investors.
Intu UK: INTU listed in London,
which owns the Trafford Center in Manchester, had planned to raise capital between £ 1bn and £ 1.5bn by the end of February, to consolidate its balance sheet after being hit hard by the collapse of several large retailers street over the past year.
“The board believes that the current uncertainty in the stock and commercial real estate investment markets has prevented a number of potential investors from committing capital to the company and therefore Intu has not been able to meet the target amount right now, ”the company said in a statement. on the London Stock Exchange.
Intu shares plunged more than 40% at the start of the London Stock Exchange, before recovering to trade down 35.12% at 3:10 pm GMT.
“The massive sell-off in global markets is bad for more than just investors who may have seen their portfolios drop in value. It’s also negative for companies trying to raise funds, as institutional investors will be very cautious about investing cash in new stocks when there is so much uncertainty as to whether we have seen the worst market crash, ”said Russ Mold, chief investment officer at AJ Bell.
Intu boss Matthew Roberts said “a number of alternative options” had been presented during the fundraising process and the company would explore them further. These include the sale of assets and “alternative capital structures”.
The company has nearly £ 190million in debt that is due to be repaid or refinanced within the next 12 months. He said he was in compliance with his covenants, but warned he could breach some of them by the test date set for July 2020 if property valuations continue to decline.
“Intu’s only plausible solution is to sell more assets, but that may simply delay it temporarily rather than create a lasting solution to its predicament. Its future is far from bright, ”said Mold.
Over the past year, Intu has divested nearly £ 600million in assets, slashed its capital spending portfolio by £ 60million and suspended its dividend to improve liquidity.