CSC closes in on Trafford Centre mall
CAPITAL Shopping Centres (CSC) confirmed yesterday it was close to buying the Trafford Centre in Manchester for a total of £1.6bn.
The retail property group said it was in advanced talks with current owner Peel Holdings, which has held the shopping centre since it was built in 1998 at a cost of £600m.
CSC plans to issue £750m in new shares and convertible bonds to Peel, as well as taking on £800m net debt from the firm if the deal goes ahead.
Peel, which is privately owned by property billionaire John Whittaker, will own 19.9 per cent of CSC as part of the deal. Peel could also convert bonds it receives through the sale into shares, giving it a 24.9 per cent stake and making Whittaker the largest investor in CSC.
He will become a non-executive director and deputy chairman of the CSC board, the firm said.
CSC announced that it was also considering an equity placing worth up to 9.9 per cent of existing shares, worth £221m at yesterday’s closing price, to help fund the purchase and pay down debt. However, the total amount raised is likely to be lower as the stock becomes diluted by the two share issues.
Seymour Pierce analyst Sue Munden, who currently has a “sell” rating on CSC, told City A.M. yesterday: “This move is to be welcomed. Obviously the share placing is going to have a dilutive effect, but it is a way for the company to attract investors at a time when they are acquiring a high profile asset.
“We have always believed that the operational management of the group is strong but they have been held back, in our view, by a weak financial structure.”
Shares closed 5.1 per cent lower yesterday at 337.4p.
SIMON MACKENZIE-SMITH
MERRILL LYNCH
CAPITAL Shopping Centres (CSC) has taken on Bank of America Merrill Lynch and UBS to advise on its planned share placing.
Simon Mackenzie-Smith and Simon Fraser are heading the team at BAML. Mackenzie-Smith has been with Merrill Lynch since 1996, when he joined as managing director of investment banking. He is credited with being instrumental in establishing the bank’s UK franchise, and has been involved in a wide range of mergers and acquisitions and restructurings – including Punch’s acquisition of managed pubs operation Spirit in 2006.
Co-head of corporate broking Simon Fraser has spent 14 years at the bank, working alongside Mackenzie-Smith on the Segro, Debenhams and Liberty deals, as well as Inchcape, Natex and SSE.
UBS corporate broking managing director Jonathan Bewes and head of investment banking Hew Glyn Davies are also advising. Davies has several retailers among his client list including Sainsbury’s and Northern Foods, as well as Bank of Ireland, which completed a €1.7bn rights issue in June.
Bewes worked with Davies to advise Capital Shopping Centres when it split from Liberty in March this year.
He has also worked with AMEC, chemicals firm ICI and broadcaster Carlton during its £4bn merger with Granada.