Hammerson consolidates ahead of capital raise
The 24 for 1 rights issue will be highly dilutive for shareholders who do not take up their rights. Hammerson has gone ahead with a share consolidation ahead of a rights issue after its plan to reorganise its capital won the approval of shareholders at a general meeting on Tuesday. At the start of trade
Hammerson consolidates ahead of capital raise
The 24 for 1 rights issue will be highly dilutive for shareholders who do not take up their rights.
Hammerson has gone ahead with a share consolidation ahead of a rights issue after its plan to reorganise its capital won the approval of shareholders at a general meeting on Tuesday.
At the start of trade yesterday, the London and JSE-listed property development and investment company’s shares were consolidated on a 1 for 5 basis. That will be followed by the 24 for 1 rights issue, which was priced at R3.41 per share prior to the consolidation.
The cash call, announced a month ago, will raise £552 million. Together with the sale of almost all of its interest in VIA Outlets, the shopping centre owner will raise net proceeds of about £794 million, which will strengthen its financial position and provide liquidity as it refocuses its property portfolio on flagship destinations in the UK and Ireland. It said debt would reduce to £2.2 billion.
When it announced the capital raise last month, Hammerson said it was proactively taking measures to deal with the substantial impact on its business driven by major structural changes to the retail industry, which had been exacerbated by the effects of Covid-19. Its two largest shareholders, APG and Lighthouse Capital, had given irrevocable undertakings to take up their rights in full.
Hammerson reported a sharp decline in earnings for the six months to end-June and withheld an interim dividend due to the impact of Covid-19, which forced it to close shopping centres and make provisions for reduced collections partly due to amended rental agreements and deferments. Net rental income fell 44% to £87.3m million and adjusted profit dropped 84% to £17.7 million. Its loss tripled to £1.09 billion, from £320 million previously, and its basic loss per share widened to 142.2p from 41.8p, including portfolio non-cash revaluation losses of £939 million.
Following the share consolidation, Hammerson closed 12% up at R64 yesterday. Its shares ended trade at R11.43 on Tuesday.
Hammerson now also slapped with JSE's "highly dilutive right offer" label.
— Keith McLachlan (@keithmclachlan) September 2, 2020
Hammerson Rights Issue:
— Karin Richards (@Richards_Karin) September 2, 2020
• Consolidation of 1 consolidated share for every 5 shares held (today)
• Followed by a Rights Offer of 24 new shares for every consolidated share held. LDT 4Sep
• Price: R3.41 per new share
• Discount: 38.7% to theoretical ex-rights price
Main Image: Financial Times
