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Intu Properties drops after announcing ?1.3bn cash call, credit line extension
26th Feb 2020 14:31
(Sharecast News) - Intu Properties clinched an extension of its medium-term lending facility, albeit of a smaller amount and with the proviso that it raise ?1.3bn in fresh capital.
It was the first time that the property developer had provided a specific figure for the upcoming cash call.
All of the lenders participating in its previous revolving credit facility, Bank of America, Barclays, Credit Suisse, HSBC, Lloyds, Natwest and UBS, would participate in the new ?440.0m RCF which was set to extend until 2024.
The new RCF would replace the firm's current ?600.0m credit line, which the company said is due to expire in October 2021.
An update on its equity raise would be provided alongside its full-year 2019 numbers, on 5 March, the company said in a statement.
Chief executive Matthew Roberts said: "This extension of our RCF is a key milestone in addressing our near-term refinancing needs. It also underlines the continued support we have from our relationship banks. This revised RCF will extend the maturity profile and be used to provide general liquidity for intu.
"Fixing the balance sheet remains our number one priority and we remain engaged with shareholders and potential new investors in relation to the intended equity raise."
Analysts at RBC Capital Markets believed the equity raising combined with the extension of the credit line to 2024 "would materially reduce Intu's financing risk".
Under a worst case scenario, that is assuming that lenders balked at refinancing any of its existing debt pile and that no further assets were sold, they estimated that the outfit would have enough resources to meet all its debt obligations until 2023.
But if banks were willing to refinance half the existing facilities, then it should be able to meet all its obligations before 2027.
Nonetheless, Intu continued to face "significant near-term risks from the current turbulence and uncertainty in UK retail property markets," RBC said.
"A capital restructuring could break the negative sentiment loop, but likely needs to be very large in our view."
As of 1444 GMT, shares of Intu were trading 6.19% lower to 14.03p.
It was the first time that the property developer had provided a specific figure for the upcoming cash call.
All of the lenders participating in its previous revolving credit facility, Bank of America, Barclays, Credit Suisse, HSBC, Lloyds, Natwest and UBS, would participate in the new ?440.0m RCF which was set to extend until 2024.
The new RCF would replace the firm's current ?600.0m credit line, which the company said is due to expire in October 2021.
An update on its equity raise would be provided alongside its full-year 2019 numbers, on 5 March, the company said in a statement.
Chief executive Matthew Roberts said: "This extension of our RCF is a key milestone in addressing our near-term refinancing needs. It also underlines the continued support we have from our relationship banks. This revised RCF will extend the maturity profile and be used to provide general liquidity for intu.
"Fixing the balance sheet remains our number one priority and we remain engaged with shareholders and potential new investors in relation to the intended equity raise."
Analysts at RBC Capital Markets believed the equity raising combined with the extension of the credit line to 2024 "would materially reduce Intu's financing risk".
Under a worst case scenario, that is assuming that lenders balked at refinancing any of its existing debt pile and that no further assets were sold, they estimated that the outfit would have enough resources to meet all its debt obligations until 2023.
But if banks were willing to refinance half the existing facilities, then it should be able to meet all its obligations before 2027.
Nonetheless, Intu continued to face "significant near-term risks from the current turbulence and uncertainty in UK retail property markets," RBC said.
"A capital restructuring could break the negative sentiment loop, but likely needs to be very large in our view."
As of 1444 GMT, shares of Intu were trading 6.19% lower to 14.03p.