Shaftesbury slumps on discounted cash call to weather pandemic

West End landlord Shaftesbury slumped on Thursday after announcing plans for a discounted cash call to help it weather the Covid-19 pandemic.

The company plans to raise around £297m through a placing and open offer and a further £10m via an offer and subscription. The new shares will be issued at 400p each, which is a near 20% discount to Wednesday’s closing price.

Shaftesbury said it had assessed its financial position in light of the implications of the pandemic on its short- and medium-term prospects and decided to raise the money to ensure it maintains a strong financial base, is positioned to return to long-term growth and "should conditions improve, is able to invest further in its exceptional portfolio".

Shaftesbury’s biggest shareholder, Capital & Countries Properties, has committed to subscribe for £65m new Shaftesbury shares, taking its holding over 25%. Shareholder Norges is also backing the fundraising.

Chief executive Brian Bickell said: "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, and that we will be 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.

"We are grateful for the support of our shareholders and new investors, and particularly our cornerstone investors CapCo and Norges, with whom we share a commitment to, and belief in, the long-term prospects for the West End."

The capital raise is subject to approval at the company's general meeting on 17 November.

At 1240 BST, Shaftesbury shares were down 17% at 415.40p, while Capital & Counties shares were down 10% at 102.60p.