Shaftesbury (SHB.L), the property company that owns vast swathes of London’s West End and Chinatown, is going cap in hand to investors.
The company on Thursday announced plans to raise £297m ($390m) through a heavily discounted open offer of new shares. Total fundraising could hit £307m if investor demand is big enough.
Shaftesbury said the funds would help to bolster its balance sheet, allowing it to weather the ongoing crisis in central London.
“The capital raising announced today will ensure the group maintains the financial flexibility and resources to navigate the unprecedented near-term operational challenges caused by the COVID-19 pandemic,” chief executive Brian Bickell said in a statement.
He said the funds would ensure Shaftesbury was “well-placed to benefit from the gradual return to more-normal patterns of life and activity that have always made London's West End an unrivalled global destination.”
Shares will be offered at 400p a piece in the new issue. It represents a 20% discount to Wednesday’s closing price of 501p.
Shaftesbury shares dropped 15% at the open on Thursday.
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Shaftesbury said investors holding just over half of the company’s total issued shares had already agreed to participate in the fundraising.
Capital & Counties (CAPC.L), which owns just over 26% of Shaftesbury, has agreed to invest a further £65m as part of the deal. In a separate statement, Capital & Counties, which owns Covent Garden, said Shaftesbury’s share issue was “priced attractively in view of the long-term prospects and resilience of prime central London.”
Shares in Capital & Counties were down 8.6%.
Norway’s Norges Bank has also agreed to invest £77m in Shaftesbury as part of the fundraising. The bank already owns 26% of the business.
The COVID-19 pandemic has had a big impact on Shaftesbury’s business. Declining tourist numbers, the closure of theatres in the West End, and work from home orders have led to far fewer visits to its central London property portfolio. The company said last month it had collected just 41% of rents due since April.
Shaftesbury shares have fallen 55% this year.
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