Capital & Regional has moved to halt an alarming slump in its share price. On Thursday the shares lost 15 per cent of their value on rumours that the company’s Mall fund was in breach of its loan-to-value covenants. But in early trading on Friday the share price rallied slightly after a firm denial from the company.
In a stock exchange statement issued after the market closed on Thursday the company pointed out that its £1.4bn of Mall bonds do not have a formal loan-to-value clause, although a £300m facility with Royal Bank of Scotland did have a limit of 60 per cent. And the partnership deed between C&R and the investors in the Mall Fund also capped gearing to 60 per cent of the portfolio value. As at the end of March 2008 the fund’s debt stood at 58.8 per cent of value.
The statment concluded: “The Mall has a number of options including, but not limited to, realisation of assets which will ensure that the Mall remains within the agreed covenants. The company and Morley Fund Management, the fund manager of the Mall, are working closely together to this end.”
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