(Alliance News) - Hammerson PLC on Thursday announced a series of transactions to recapitalise the business and reduce leverage by a quarter after its loss widened in the first half of 2020.
The shopping centre owner proposed a rights issue to raise gross proceeds of GBP552 million and the sale of substantially all of its 50% interest in VIA Outlets to a mutual fund managed by APG Asset Management NV for estimated cash proceeds of EUR301 million.
In conjunction with the rights issue, Hammerson said it will implement a capital reorganisation, comprising a sub-division and share consolidation to reduce the nominal value of its existing shares. This should result in a higher market price for the consolidated shares and, accordingly, a more appropriate issue price in the rights issue.
The capital reorganisation will result in Hammerson shareholders holding one consolidated share for every five existing shares.
Hammerson then will offer 24 new consolidated shares for every 1 consolidated share.
The rights issue will result in an offer of 3.68 billion new shares, representing 96% of the enlarged share capital following completion of capital reorganisation and the rights issue.
Taking into account the capital reorganisation, the UK issue price of 15 pence per new share represents a discount of 95% to the LSE closing price of 279.80p per share on Wednesday.
The SA issue price of ZAR3.41 per new share represents a discount of 95% to the JSE closing price of ZAR63.50 per share.
On Thursday, Hammerson shares were trading 1.5% lower in London at 55.14p each. The stock ended 2019 at 308.70p. In Johannesburg, the stock was up 0.7% at ZAR12.79 a share.
Hammerson explained that it is "pro-actively" taking measures to deal with the "substantial" impact on its business, driven by major structural changes to the retail industry, which have been exacerbated by the effects of Covid-19.
The company said that it expects these transactions to strengthen its financial position, reducing absolute indebtedness and providing liquidity headroom and financial flexibility as it continues to refocus its portfolio towards flagship destinations in the UK and Ireland.
Following completion of both transactions, Hammerson said its net debt would reduce to GBP2.2 billion on a pro forma basis as at June 30.
"Today we have announced a series of transactions to recapitalise the business and reduce leverage by a quarter. This will help us to deal with these unprecedented conditions while enabling us to reposition Hammerson further. Looking forward, we will continue to dispose of assets and recycle capital from across the portfolio as we create a business focused on flagship destinations and mixed-use City Quarters over the medium term, "said Chief Executive David Atkins.
"The extraordinary disruption caused by Covid-19 on the retail property sector, the economy and society as a whole is reflected in these half year results, however, in recent weeks we have seen an encouraging increase in footfall as confidence begins to return amongst visitors to our flagship destinations," added Atkins.
Turning to result, for the six months to the end of June, net rental income declined by 44% year-on-year to GBP87.3 million, resulting in a pretax loss of GBP1.09 billion, widened from a loss of GBP319.2 million a year earlier.
Portfolio value, meanwhile, decreased by 8% to GBP7.69 billion when compared to the first half of 2019.
EPRA net tangible assets value per share declined to GBP4.58 from GBP5.82 a year prior.
Hammerson said it will not be paying an interim dividend, having distributed 11.1 pence a share a year ago.
By Evelina Grecenko; firstname.lastname@example.org
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