Intu SGS - comment

SGS have updated their March 2023 Business Plan which shows an increase in Static NRI (Net Rental Income) of £27m to £94m in FY27 (March 2027). This is primarily driven by newly signed tenancy agreements, with lower business rates and some other minor changes contributing to the budgeted increase. This is achieved from c.£140m of CAPEX over the coming 4 years (In line with the previous plan).

This revised business plan is driven by a potential recapitalisation transaction by existing key creditors, who hold sufficient debt.   The plan, once implemented, would result in a deleveraging of the Group and a transfer of ownership and control to existing secured creditors. The proposed transaction will consist of a new senior secured term loan and a credit facility at the operating level to support CAPEX, with both facilities to be provided by new 3rd party lenders. Existing creditors will receive a limited recourse hold-PIK, stapled to the equity with a partial prepayments and then exchanged in full for the new Holdco instruments. 

We will write a fuller note later this week and the implication for our own long position.