Intu’s future ‘far from bright’ as share price tanks

Shopping centre owner Intu’s share price plummeted yesterday (4 March) after it was forced to abandon a planned equity raise.

The company was looking to raise between £1 billion and £1.5 billion, but failed to muster enough support from shareholders to carry out the plan. The blow casts doubt over a £440 million credit facility signed just a few days ago which was dependent on Intu raising a minimum of £1.3 billion.

Shares in the company, which have been in decline for some time, immediately sank from 10.64p to 6.61p on the back of the news. To put things in perspective, Intu’s share price was hovering consistently around the 110p mark this time last year.

It also emerged yesterday morning that the market value of Intu Derby and Intu Victoria Centre has decreased dramatically, with the former now worth £77.3 million as compared to £372.5 million in 2018. The Nottingham centre was valued at £201 million at the year end, down from £261 million the previous year.

An independent valuation of Intu’s portfolio at 31 December 2019 delivered a valuation deficit of £2 billion. The shopping centre owner, which has been engaged in efforts to fix its balance sheet for some time, said this was due to “weak sentiment” rather than hard transactional evidence.

Russ Mould, investment director at AJ Bell, said: “Sentiment was already weak towards the business thanks to ongoing woes in the retail market and falling retail property valuations. Therefore Intu’s equity raise was always going to be a tough one, potentially resulting in new shares being issued at a very large discount to the market price as a way of compensating investors for the risks they would be taking on.

“The fact that the equity raise has been scrapped altogether leaves Intu in a very difficult situation. There is no solid plan B and so the market will now be asking big questions as to how Intu might be able to crawl out from under the significant weight of its £4.5 billion net debt position.

“Intu’s only plausible solution is to sell more assets but that may simply tide it over temporarily rather than create a long-lasting fix to its sticky situation. Its future is looking far from bright.”