Hammerson PLC (LON:HMSO), the shopping centre owner, has launched a £552mln rights issue that wipes out 95% of the value of its shares as priced yesterday.
The share issue was flagged earlier this week and is accompanied, as expected, by the planned sale of its stake in European joint venture Via Outlets for £274mln.
The Bullring and Brent Cross owner said the £794mln net being raised will reduce its net debt to £2.2bn and lower the ratio of debt to loans to 41.7%.
The new shares will be issued at 15p each, a 94.6% discount to the closing price yesterday.
APG and Lighthouse, the property group’s two major shareholders, have agreed to take up the issue in respect of their 20% and 14% stakes.
To make its share price respectable after the dilution from the rights, Hammerson intends to consolidate its shares on a five into one basis after which shareholders can apply through the rights issue for 24 new shares for every consolidated one they own.
Hammerson unveiled the rescue refinancing alongside a £1.1bn loss for the half-year to end-June, 2020.
The property group said it took £377mln of impairment charges in the half, while losses from its joint ventures soared to £500mln.
David Atkins, chief executive, said going forward Hammerson would also adopt a new approach to leasing property. This would be based on its experiences with brands; current leases in Europe; and the more collaborative approach of premium outlets, he added.
More flexible leases; rebased rents at more affordable levels; indexation replacing the existing rent-review system and an omnichannel top-up element are all part of the plan.
In a statement, Atkins said: "The pandemic has exacerbated structural shifts in retail, exerting further pressure on both property owners and brands, and provided further evidence that the UK's historic leasing model has served its time.
“It is outdated, inflexible and needs to change. We are introducing a new UK leasing approach - one that is simpler, reflects an omnichannel retail environment and rewards positive performance on both sides. It will deliver a sustainable, growing income stream and we are in initial discussions with retailers and anticipate introducing the first of the new leases later this year."
Hammerson pointed out that it wants to resume dividend payments once the refinancing transaction completes, though these will be in shares in initially to maintain its REIT compliance.