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French boardroom revolution could force Westfield sell-off

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By STEVEN DOWNES

Plans for a Westfield in Croydon were removed from developers URW’s pipeline earlier this year

It is looking increasingly likely that Unibail-Rodamco-Westfield will look to unload any interests they hold in the long-promised £1.4billion redevelopment scheme for Croydon town centre.

It is almost two years since URW decided to “review” the already much-delayed scheme because of uncertainties over the strength, or lack of it, in the commercial retail property sector. An unconvincing suggestion of some sort of “phased” development has been put forward in the past six months. But now, what amounts to a boardroom coup has taken place at Paris-based URW, with shareholders rejecting a £3.1billion rights issue under pressure from activist investors.

URW wanted to issue new shares to raise extra capital to cope with the company’s heavy debts. But a rival consortium, headed by a former Unibail-Rodamco chief exec, wants to sell-off large chunks of the business which were acquired when Unibail-Rodamco bought out Aussie-based Westfield in June 2018.

Reuters reports today, “In a rare rights issue rejection for a company on France’s blue-chip index, the shareholder vote fell narrowly short of the two-thirds majority required to pass the resolution, with 62 per cent in favour of the capital increase.”

Westfield’s involvement in Croydon began in 2012, when the then Tory MP Gavin Barwell got his mate, Boris Johnson, when he was London Mayor, to bring the Australian developers together with Hammerson, the owners of Centrale, for a massive town centre redevelopment which included the ageing Whitgift Centre. At the time, Barwell was a trustee of the Whitgift Foundation, the owners of the shopping mall.

Despite twice having plans for the refurbishment of the town centre accepted by Croydon Council under then-CEO Jo Negrini, and a hugely expensive Compulsory Purchase Order exercised over parts of the site, the decline of high street retailing saw the developers get cold feet and repeatedly postpone work on the scheme.

Under the original timetable, the glitzy new supermall should have been open for Christmas 2017.

Now, and with partners Hammerson struggling to collect rents from their covid-closed tenants in shopping centres across the country, the latest moves in France could finally seal the fate of the doomed Croydon project.

As Reuters reports, URW shares have lost about 60 per cent of their value “as the retail sector has taken a hammering from the coronavirus crisis”.

Xavier Niel: the French tech billionaire is now calling the shots over Westfield

The company’s management’s plans for a money-raising share-issue were thwarted by “intense opposition from a consortium led by French billionaire Xavier Niel and former Unibail CEO Leon Bressler, who have campaigned for Europe’s biggest property owner to step up asset sales, including some of the US shopping centres it took on with its purchase of Westfield,” Reuters reported today.

“They blame Unibail’s heavy debt on the Westfield acquisition, arguing that the group could meet its short-term debt obligations without a rights issue that they say would destroy the company’s share value.”

At the URW annual meeting yesterday, Niel, Bressler and businesswoman Susana Gallardo were appointed to the company’s board, where they will be able to influence company policy over which assets might be sold off.

As such, it is unlikely that there will be any release of investment funding for Croydon’s sidelined Westfield centre, though as analysts warned today, the problem facing URW will be to find buyers for their American property portfolio and any other schemes they decide to flog off.

Read more: Westfield letter that Tony Newman didn’t want you to see
Read more: Barwell, Brexit and Croydon’s troubled Westfield dream


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