Capital & Regional has unveiled plans to raise new equity for its troubled Mall fund, the UK’s biggest owner of community shopping centres. It will offer the unit holders in the fund new units at a deeply discounted price in a bid to raise £286m which would allow it to pay off a bank loan where it was in danger of breaching its loan-to-value covenant.
The new units will be offered at 101 pence per unit, a discount of 45 per cent to the April unit price, and Morley Fund Management, co-manager of the fund, has arranged for it to be underwritten by its associate companies Norwich Union Life and Pensions and CGNU Life Assurance.
Capital & Regional owns a roughly one-third stake in the fund, as well as acting as manager. It has not yet committed itself to taking up its entitlement to new units and in a stock exchange announcement it said: “Capital & Regional remains committed to the Mall and its franchise. In determining the extent of any participation in the equity raising, Capital & Regional will balance the value dilution from not subscribing against the benefit of improved financial flexibility. If it chooses not to participate in full, the new equity in the Mall will have a beneficial impact on Capital & Regional’s financial resilience, but at a potential cost of up to 60 pence per share due to the effect of dilution.”
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