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Debt-laden Intu ditches equity raising, shares hit record low

Published 04/03/2020, 09:24
© Reuters. FILE PHOTO: A general view shows the Trafford Centre shopping centre in Manchester

By Yadarisa Shabong

(Reuters) - Britain's Intu (L:INTUP) said on Wednesday it had abandoned an attempt to raise up to 1.5 billion pounds via new equity after investors shunned the debt-laden mall operator's plans, kicking its shares down 40% to a record low.

The London-listed firm, which owns Manchester's Trafford Centre and another 20 properties in Britain and Spain, said that depending on performance in the months ahead, there was a risk that it might be found in breach of some of its debt covenants in July.

It said it would now seek other sources of financing, including looking at further asset sales, and take timely mitigating actions which may include negotiating debt waivers where appropriate.

The company had planned to raise between 1 billion and 1.5 billion pounds to shore up its balance sheet after being hit by a spare of high-profile failures in the retail industry.

"The board believes the current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business," it said in a statement, adding: "Intu will continue and broaden its conversations with its stakeholders."

Faced with a tougher economy, Intu has had to deal with company voluntary agreements - an insolvency procedure used by retailers to force renegotiation of leases - from brands including Debenhams, Toys R Us, House of Fraser and HMV.

Meanwhile, other retailers are shifting to online sales in a bid to cut costs.

The company said it had nearly 190 million pounds of debt due to be repaid or refinanced within the next 12 months.

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Intu's combined credit score, which measures on a scale of 100 to 1 how likely a company is to default on its debts in the next year, is "1", Refinitiv Eikon data showed, indicating it is expected to default.

It pushed back its full year results announcement to March 12 from March 5.

The company said that, apart from the challenges caused by tenants going bust, its income has been "resilient in what has been a challenging year for retail and retail property".

Footfall at its centres through the first eight weeks of 2020 increased by 0.9% compared with the same time last year, but occupancy at the end of last year fell to 95% from 97% in 2018 due to store closures.

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Searching for Debt waivers? Hehe
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