Shares of troubled shopping centre operator Intu Properties plc fell another 30% on Wednesday after it abandoned an equity raise of between £1 billion and £1.5 billion.
The value of Intu’s bonds also fell.
The move casts doubt on the future of Intu, which runs Manchester’s Trafford Centre and Arndale Centre, Newcastle’s Eldon Square and Gateshead’s Metrocentre.
Intu said it is in compliance with its debt covenants — but warned investors there is a risk that, depending on the performance of its business and movements in valuations, it could be in breach of certain covenants at their scheduled testing date in July 2020.
“Intu has, over the past several months, engaged in extensive discussions with its shareholders and potential new investors regarding a possible equity raise of between £1 billion and £1.5 billion,” said Intu in a stock exchange statement.
“Following these discussions intu has concluded it is unable to proceed with an equity raise at this point.
“While a number of intu’s shareholders and potential new investors indicated their support for an equity raise, 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 and intu was therefore unable to reach the target quantum at the current time.
“However, during this process, intu received several expressions of interest to explore alternative capital structures and asset disposals.
“Accordingly, intu will continue and broaden its conversations with its stakeholders with a view to discussing the range of options available to the company to demonstrate the equity value of the business and to utilise its assets to provide further liquidity.
“These include alternative capital structures and solutions and further disposals. intu will also continue to keep under review the feasibility of an equity raise.”
Intu CEO Matthew Roberts said: “We remain focused on fixing our balance sheet in the near term to ensure this business has the financial footing it needs to realise its significant potential.
“While it is disappointing that the extreme market conditions have prevented us from moving forward with our planned equity raise, I am pleased that a number of alternative options have presented themselves during the process which we will now explore further.
“We have a concentrated and well-invested portfolio of many of the UK’s best retail and leisure destinations where both shoppers and customers want to be.
“Operationally our business is strong, delivering a resilient rental performance despite ongoing pressure from CVAs and administrations, with stable occupancy rates and footfall that consistently outperforms the benchmark.
“Our centres are the best performers in the regions in which we are present and independent research shows that stores with intu outperform retailers’ average sales by nearly 30 per cent.
“This is a compelling proposition and one that will stand the test of time.
“We will face further challenges in what has been an extraordinary few months for intu and the wider sector, but I am confident that we will face these head on and emerge a leaner, fitter and more focused business.”