Market wrap: intu drops on conditional debt deal
Shares in intu Properties fell on Wednesday, after the shopping centre owner announced that a £440m revolving credit facility it has struck with seven of its banks hinges on the company raising £1.3bn of fresh equity.
Although an equity deal from intu has been expected as the company works to fix its balance sheet, the figure of £1.3bn is larger than had been anticipated.
Analysts at brokerage Stifel said even an equity raise of £1.3bn “would only buy the company time, rather than a long-term future”.
Shares in intu Properties fell on Wednesday, after the shopping centre owner announced that a £440m revolving credit facility it has struck with seven of its banks hinges on the company raising £1.3bn of fresh equity.
Although an equity deal from intu has been expected as the company works to fix its balance sheet, the figure of £1.3bn is larger than had been anticipated.
Analysts at brokerage Stifel said even an equity raise of £1.3bn “would only buy the company time, rather than a long-term future”.
“We could yet be surprised by an equity raise with a novel structure, or a white knight to rescue the balance sheet before debt covenants are breached,” Stifel’s analysts wrote.
“However, a £1.3bn equity raise for a company with a market cap of £200m would require investors to contribute £6.50 for every £1 invested in the company. It’s either digging deep to sextuple up for existing holders, or be diluted away. We struggle to see an equity raise succeeding on the terms currently communicated to the market.”
Intu’s shares closed down 1.09p, or 7.32%, at 13.86p, giving the company a valuation of £202m.
At British Land, which has not commented publicly on reports that chief executive Chris Grigg is soon to step down, shares were down 4.2p, or 0.78%, at 531.6p
The FTSE 100 closed at 7,042, up 24.5 points, while the FTSE 250 was down 93 at 20,622.
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