Intu (INTU) has abandoned a planned equity raise of up to £1.5bn after failing to drum-up sufficient support from potential investors, revealing that it is in danger of breaching certain debt covenants at the scheduled testing date in July.
The retail landlord said that while some existing shareholders and potential new investors had indicated their support for the fundraise, uncertainty in equity and retail property investment markets precluded a number of potential investors from committing capital.
The group’s loan-to-value (LTV) ratio had risen to 68 per cent at the end of December – or 65 per cent following the receipt of disposal proceeds – up from 53 per cent at the end of 2018, following a devaluation in the shopping centre portfolio.
Management said a further 10 per cent fall in property valuations would create covenant cure requirements (whereby additional capital is injected to 'cure' a breach) of £274m, while a 10 per cent fall in net rental income would create a covenant cure requirement of £34m.
Around £50m in cash has been used to reduce the leverage levels in a small number of debt facilities in order to meet the relevant LTV covenants at the end of December. The group has £190m in debt expiring and £93m in swaps payable within the next 12 months. That compares with £168m in cash at the end of February.
Like-for-like net rental income was down 9.1 per cent in 2019. Intu's full-year results were expected on 5 March, but the official release is now due on 12 March.
