Capital & Regional soars on banking deal

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Date: Thursday 28 Aug 2008

LONDON (ShareCast) - The share price of cash strapped property asset manager Capital & Regional surged as it confirmed it has finalised the renegotiation of its financial covenants with its principal lending bank.

The group’s revolving credit facility has been reduced from £175.5m to £125.5m and the interest margin has been lifted from 0.9% to 1.4%, in return for which the group’s banker has amended the see through gearing covenant so that only debt with recourse to the group is included.

The significance of the change is that the group will no longer be hostage to the fortunes of its funds or its German portfolio.

The group had drawn down £49.3m of its £125.5m facility, as at £28 August.

The group said its total debt on a pro-forma basis will have fallen by 40% as a result of its disposal programme.

The group’s net asset value (NAV) per share on a triple net basis slumped to 706p in the first half of 2008 from £10.04 at the end of 2007, largely because of a downshift in valuation yields but also partly due to the one-off impact of the rescue rights issue of its Mall Unit Trust.

Capital & Regional did not subscribe to the rights issue and the dilutive effect on NAV of this decision has been estimated at 41p per share.

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