Cash-strapped companies to ask shareholders for more funding - Business News - Business - The Independent

Cash-strapped companies to ask shareholders for more funding

Builders, retailers and banks target shareholders

Dozens of British companies are set to launch new rights issues over the coming weeks in an attempt to pay down their debts and repair their cash-starved balance sheets.

Hammerson, the UK property company which was behind the recent redevelopment of Birmingham's Bullring shopping centre, is expected to kick off the current round of fund-raising today, unveiling plans to tap its shareholders for around £600m. British Land, another property group, is also considering launching a rights issue of around £500m – and may make an announcement when it publishes its third-quarter results on Thursday.

Property companies have run into acute funding difficulties over the last few months, as the value of offices, shops and warehouses has plummeted. A new report published by the Royal Institution of Chartered Surveyors today reveals that more than 70 per cent of surveyors saw a fall in demand for commercial property in the final quarter of last year, with the retail sector being the worst hit.

Hammerson's rights issue is to be underwritten by Citigroup and Deutsche Bank, which are believed to have already begun sounding investors out about the fund-raising initiative.

It is thought that a number of quoted property companies will be forced to raise new capital over the coming months. According to a recent research note issued by Morgan Stanley, Brixton, Liberty International and Slough Estates will all need to raise new funds if they are to be able to sustain a further 10 per cent fall in commercial property values. The note also suggests that British Land would need to raise more than £800m to protect itself against such a fall in values – although it is not believed the company is considering a rights issue of this size at the moment. Workspace, another commercial group, raised close to £900m last month, while the homebuilder Barratt Developments is believed to be currently considering a rights issue as well.

Oliver Gilmartin, the senior economist at Rics, said it was likely that there would be a further weakening in the market over the coming months. "Concerns as to the depth and duration of the current downturn are being reflected in the commercial property market where investment has been dramatically scaled back," he said. "New Government packages such as loan guarantee schemes and the separation out of toxic assets are welcome developments for both corporate occupiers and investors into commercial property, although they will not prevent a further near-term weakening in rental prospects on rising space."

He added, however, that the collapse in sterling could help spark interest from investors in continental Europe, which may help the market begin a recovery in the second half of the year.

Equity fund-raisings will not be limited to the property sector over the coming months, however. Businesses across all sectors are suffering from the shortage of credit, and are being left with no option but to ask shareholders to stump up extra cash. DSG International, which owns Currys Digital and PC World, is believed to be considering a rights issue of several hundred million pounds. Banking giant HSBC, private equity group 3i, plumbing company Wolseley, mining group Rio Tinto and food business Dairy Crest are among a long list of other businesses believed to be weighing up plans to launch rights issues in coming months.

As well as Workspace's £872m fund-raising, both Xstrata, the mining group, and Cookson, the ceramics to precious metals business, launched rights issues in January, looking to raise $5.9bn (£4bn) and £240m respectively.

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'I felt like that was the lowest I’d ever felt'
PROMOTED VIDEO
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
News
A plane flies close to the eruption of the Icelandic volcano
newsAnd yes, it's quite something
Sport
Tito Vilanova passed away aged just 45
footballThe club's former manager died in April, less than a year after he stood down
Arts and Entertainment
Benedict Cumberbatch
artAnd it's even for a good cause
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig is believed to be donning skies as 007 for the first time
Life and Style
techCriminals are targeting an e-reader security flaw
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech... and together they're worth at least £100 million
Arts and Entertainment
Matt Damon as Jason Bourne in The Bourne Ultimatum (2007)
filmMatt Damon in talks to return
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
News
newsBut just how much does a 122-carat coloured diamond go for these days?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week