Mall operator Hammerson plans rights issue and disposal to ride out crisis

(Reuters) - Debt-laden British Mall operator Hammerson HMSO.L is drawing up plans for a possible rights issue and is in advanced talks on the sale of its stake in discount shopping outlets joint venture to help it through the coronavirus crisis, it said on Monday.

FILE PHOTO: A woman is seen wearing a protective face mask in an area outside the Birmingham Bullring shopping centre while the spread of the coronavirus disease (COVID-19) continues, in Birmingham, Britain, April 9, 2020. REUTERS/Carl Recine/File Photo

Hammerson shares, which have plunged 80% this year as the retail landscape has been battered by coronavirus lockdowns, dropped 8% to 58 pence on the mid-cap index by 0733 GMT.

The health crisis has brought mall operators to their knees as their already struggling tenants have been squeezed even further by stay-at-home shoppers, prompting calls for rent relief and deferrals.

Hammerson, which runs shopping malls such as the Bullring in Birmingham, had net debt of 2.8 billion pounds ($3.7 billion) at the end of 2019, exceeding a market capitalisation of about 2.4 billion pounds at the time.

Rival Intu Properties INTUP.L, which Hammerson attempted to buy two years ago, was forced to bring in administrators in June after it failed to secure a deal with creditors as the sector outlook worsened.

Hammerson said it plans to sell its 50% stake in VIA Outlets to Dutch pension fund APG, its partner in the venture created in 2014 to acquire shopping outlet centres across Europe.

Sky News, which first reported the proposed capital increase and disposal, said Hammerson intends to raise 800 million pounds.

Hammerson did not disclose further detail on the proposed rights issue or the stake sale and declined to comment when asked by Reuters how much it plans to raise.

“We think raising about 1.3 billion pounds is more like the quantum needed to restore the balance sheet to a more comfortable level,” Liberum analysts said in a note.

In its statement on Monday, Hammerson pointed to improving sales and mall visits after it reopened its flagship destinations across Europe and reported a 30% increase in third-quarter rent collection.

Reporting by Samantha Machado and Muvija M in Bengaluru; Editing by Saumyadeb Chakrabarty and David Goodman