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Intu shares soar on report of private equity bid

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By Reuters
Intu shares soar on report of private equity bid
FILE PHOTO: Model Bethan Sowerby wears a dress made using graphene during a media event at the Intu Trafford centre shopping complex in Manchester, Britain, January 25, 2017. REUTERS/Phil Noble   -   Copyright  Phil Noble(Reuters)

(Reuters) – Shares in struggling British shopping centre operator Intu Properties Plc <INTUP.L> jumped more than 20% on Monday after the Sunday Times reported that private equity firm Orion Capital Managers was considering a buyout of the company.

Orion Capital, founded by Aref Lahham, is in the early stages of finding partners for a buyout of Intu, which has been hit by store closures and several high-profile retail failures, the report said.

A series of company voluntary agreements have led to uncertainty over the value of the income from retail properties and many British property developers have been looking to move away from the ailing retail sector.

Intu, which owns the Trafford Centre in Manchester, has also been hit with high-profile closures and company voluntary agreements – an insolvency procedure used by retailers to restructure leases – from brands like Debenhams, Toys R Us, House of Fraser, New Look and HMV.

Intu shares, which have shed nearly two-thirds of their value this year, rose as much as 21% to 44.2 pence, but were still well away from their peak value of 947 pence in 2006.

Intu declined to comment on the report, while Orion Capital did not immediately respond to a Reuters request for comment.

Many retail firms are also shutting down stores to cut costs and focusing on online sales, dealing a blow to real estate firms like Intu, Hammerson <HMSO.L> and Land Securities <LAND.L> that get a large chunk of their business from retailers.

Intu, which scrapped its dividend earlier this year and changed management after two failed takeover bids, in July adopted a new five-year strategy to reshape its business and focus on fixing its balance sheet.

The mall operator reported a fall in first-half net rental income in July and has been looking to preserve cash and reduce its debt by selling assets.

Intu, which has a market valuation of 496.6 million pounds ($608 million), has net external debt of 4.89 billion pounds according to its half-yearly report.

(Reporting by Shashwat Awasthi and Noor Zainab Hussain in Bengaluru; Editing by Arun Koyyur and Susan; Fenton)