Thursday 30 January 2020 ★ 13
© The Financial Times Limited 2020 Week 5Companies / Sectors / People
Traders in Shanghai are preparing to
return to work next week despite
orders from the local government that
businesses stay shut until February 9.
The closures in the city of more than
20m people come as concerns mount
over the coronavirus epidemic
AnalysisiPAGE 25Shanghai set to defy call
for coronavirus curfewR O B E RT S M I T H A N D
D O N ATO PAO LO M A N C I N IIntufaces a fresh setback after the
plunging value of one of its flagship
properties triggered a covenant in its
largest bond.The shopping centre owner, which has
almost £5bn of net debt, is facing a slow-
down in its regional retail hubs and is in
talks to raise an expected £1bn of equity
to bolster its finances.
Intu’s share price has tumbled more
than 80 per cent during the past year, on
concerns that the falling value of its
shopping centres will add to the pres-
sure on its stretched balance sheet.
Intu has now for the first time disclosed
that it has triggered a covenant on one ofthe bonds backing its shopping centres.
The trigger is on its largest bond, a
£485m debt backed by its MetroCentre
in Gateshead. The loan-to-value ratio
reached 71 per cent at the end of 2019, ris-
ing past a 70 per cent threshold at which
stricter conditions kick in.
The debt backing Intu’s shopping cen-
tres typically carries conditions linked
to a “loan-to-value” ratio, which meas-
ures how much the property is worth
versus the amount borrowed against it.
Sliding valuations lead to higher loan-
to-value ratios, which in turn trigger
covenants in their bonds that allow
lenders to impose new conditions or
even take control of the asset. While at
this level the covenant only restricts
cash from being sent to the Intu parentcompany, analysts and investors said it
could be the first sign of broader pres-
sures across the group.
“Is this the first domino to topple or
the second one?” said Robert Duncan,
an analyst at Numis Securities. “In isola-
tion it’s not important. But it’s what
other processes that catalyses... My
concern is that they remain very much
unable to do anything.”
Intu has previously disclosed that it
has little remaining headroom on the
loan-to-value covenants on several of its
properties. Mr Duncan added that it
would be possible to get the Metro-
Centre’s loan-to-value ratio back below
70 per cent through a cash injection.
Intu declined to comment.
Lombardpage 19Intu hit by debt blow as Gateshead
mall value triggers covenant on bond
Companies
AMD................................................................
Advent............................................................
Air France-KLM....................................1,
Airbnb.............................................................
Alcon...............................................................
Allianz...............................................................
Amazon...........................................................
Anglo American.......................................
Anglo American Platinum..................
Apple................................................9,12,16,
Arrival.............................................................
Ascential.......................................................
AstraZeneca................................................
Audi.................................................................
Austrian Airlines.........................................
Avast..............................................................
Aviva .............................................................
BASF.................................................................
BHP.................................................................
BMW............................................................2,
Berkshire Hathaway..............................
BlackRock.....................................................
Boeing............................................................
Brewin Dolphin.........................................
British Airways............................................
British Gas...................................................
CME Group.................................................
Cathay Pacific..................................1,25,
Cevian.............................................................
Cinven.............................................................
Citadel............................................................
DHL...................................................................
Daimler..........................................................
Deutsche Bahn............................................
Deutsche Bank.........................................
Drax.................................................................
Dunkin’...........................................................
eBay............................................................13,
Elliott...............................................................
Eon...................................................................
Ericsson...........................................................
Facebook...................................................9,
First Group..................................................
GVC..................................................................
General Electric..................................13,
GlaxoSmithKline.......................................
Glencore........................................................
Goldman Sachs....................................12,
Google..................................................9,15,
H&M...................................................................
HSBC........................................................10,
Harley Facades...........................................
Huawei.........................................................2,
Hurricane Energy...................................
IAG......................................................................
ING Germany...............................................
Iberdrola..........................................................
Impala Platinum.......................................
Insys.................................................................
Interbrand......................................................
Intu..............................................................13,
Investors.......................................................
Ipsen...............................................................
JPMorgan Chase......................................
Jaguar Land Rover...................................
Kone.................................................................
L Brands.................................................14,Lee Enterprises.........................................
Legal & General Inv. M’gmt..............
Linde.................................................................
Lufthansa..................................................1,
M&G Investments....................................
Marshall Wace...........................................
McDonald’s.........................................1,14,
Mercedes......................................................
Merck Group................................................
Mitsubishi Corporation........................
National Australia Bank......................
National Grid................................................
Network Rail.................................................
Nissan...............................................................
Nokia.................................................................
Norfolk Southern....................................
Novartis.............................................12,16,
Npower..........................................................
Orange............................................................
Ovo Energy.................................................
PSA....................................................................
Pfizer................................................................
Porsche..........................................................
Preqin.............................................................
Public Investment Fund......................
Purdue Pharma.........................................
Quilter............................................................
Raman Capital..........................................
Rio Tinto.......................................................
Rutherford Health..................................
SAP....................................................................
SEB..................................................................
SES..................................................................
SSE................................................................3,Sandbar Asset Management...........
Sandoz...........................................................
Santander..............................................16,
Saudi Aramco............................................
Saudi Telecom Company..............12,
Sibanye Gold..............................................
Siemens...........................................................
Sports Direct..............................................
Stagecoach.................................................
Standard Life Aberdeen.....................
Starbucks........................................................
StubHub........................................................
Studio E...........................................................
Swiss Air..........................................................
Temenos.......................................................
Tesla.......................................................9,10,
Thyssenkrupp............................................
Toyota............................................................
Twitter............................................................
UK Power Networks................................
UPS..................................................................
Uniqlo................................................................
Utility Warehouse....................................
Vale.............................................................11,
Viagogo.........................................................
Victoria’s Secret.......................................
Virgin Money.............................................
Vodafone...........................................12,14,
Volkswagen.........................................9,11,
Wells Fargo..................................................
Wendy’s.........................................................
Wizz Air........................................................
Woodford Investment M’gmt...........
Xilinx...............................................................ZTE....................................................................
Zhongji Investments.............................
Sectors
Aerospace & Defence..........................
Airlines....................................................25,
Automobiles..........................................14,
Banks........................................12,14,16,19,
Energy...................................................3,19,
Financial Services..............................19,
Financials.....................................17,19,25,
Food & Beverage....................................
Industrials...............................................17,
Media........................................................17,
Mining.............................................................
Oil & Gas................................................19,
Pharmaceuticals...........................12,16,
Property........................................................
Rail...................................................................1,
Retail....................................................15,19,
Support Services.....................................
Technology..........................2,9,12,15,16,
Telecoms..................................4,12,14,16,
Transport...............................................1,3,
Utilities.............................................................
People
Ashley, Mike...............................................
Beer, Robin..................................................
Bostock, Nathan.......................................
Botín, Ana....................................................
Branson, Richard......................................
Brzeski, Carsten.........................................
Buffett, Warren..........................................
Calhoun, David..........................................
Cook, Tim............................................9,12,Diess, Herbert........................................9,
Duffy, David................................................
Fitzpatrick, Stephen..............................
Haines, Andrew..........................................
Henningson, Lennart............................
Jobs, Steve....................................................
Kapoor, John...............................................
Kempczinski, Chris.................................
Kirsch, Harry..............................................
Lehane, Chris.............................................
Lewis, Stuart..............................................
Lombard, Didier........................................
Maestri, Luca.............................................
Merz, Martina.............................................
Miller, Simon...............................................
Moltke James von..................................
Muilenburg, Dennis................................
Musk, Elon...................................................
Narasimhan, Vas......................................
Nasser, Nasser al.....................................
Nicol, David.................................................
Oschmann, Stefan.....................................
Pettigrew, Jim............................................
Polaschek Detlef......................................
Read, Nick....................................................
Schenkel, Scott.........................................
Schvartsman, Fabio.................................
Sewing, Christian.....................................
Solomon, David........................................
Stumpf, John...............................................
Thun, Simon.................................................
Wexner, Leslie.....................................14,
Winterkorn, Martin..................................
Woodford, Neil..........................................David Calhoun. During an interview
with CNBC yesterday, Mr Calhoun
dismissed the idea of rebranding the
Max. “I’m not going to market my way
out of this,” he said.
“This plane will recover with the fly-
ing public when airline pilots step on it,
fly it, like it, and by the way, based on all
the test flights we’ve had to date, which
are many, they do.”
The economic damage has rippled
beyond Boeing to its suppliers.General
Electricyesterday forecast that jet
engine shipments for the Max would fall
by half in 2020 compared to 2019 as a
result of the production freeze, and it
forecast lower revenue growth and
profits this year, partly as a result.The company’s cost estimates do not
include potential damages or settle-
ments with families of the 346 people
killed in two Max crashes five months
apart, or the cost of litigation.
Boeing shares were up 2 per cent by
mid-afternoon in New York. “Announc-
ing all of these negative items today
removes major overhangs on the stock,”
Peter Arment, an analyst at Robert
Baird, said in a note. “This quarter’s
kitchen-sink report is a step in the right
direction for the stock.”
Boeing has struggled since regulators
grounded the Max 10 months ago. Fall-
out from the crisis led to the removal of
chief executiveDennis Muilenburg,
who was replaced by board veteranBoeing’s projected costs have bal-
looned since it forecast last year that the
grounding of the jet would cost it $9.2bn.
Since then it has stopped production
and stretched to mid-year its estimate of
when federal regulators might clear the
Max to return to the skies.
The plane maker now anticipates
$8.3bn in payments to airlines for not
delivering the jets and $6.3bn in costs
over the Max’s entire production cycle,
according to an investor presentation.
Boeing also expects $4bn in “abnor-
mal production” costs that include pay-
ments to suppliers and keeping Max
workers on the payroll elsewhere in the
company while the assembly line in
Renton, Washington, is shut down.C L A I R E B U S H E Y— CHICAGO
G R E G O RY M E Y E R— NEW YORK
Boeinghas more than doubled the total
cost of the 737 Max crisis to $18.6bn, as it
accounts for payments to airlines,
reduced profits over the plane’s produc-
tion cycle and expenses tied to halting
manufacturing.
The manufacturer reported a full-
year loss of $636m on $76.6bn in
revenue — its first annual loss in more
than two decades as it grappled with the
fallout from the grounding of its best-
selling jet after two fatal crashes. For the
fourth quarter, it recorded $17.9bn in
revenue and a loss of $1bn.
It reported a $2.33 core loss per share,
omitting certain pension items.
Boeing’s 737 Max bill soars to $19bn
3 First loss recorded in 20 years 3 Shares rise 2% 3 Rebranding of aircraft dismissed
StubHub faces the threat of legal action
from the UK’s competition authority,
which alleges that the ticket resale site
has misled consumers.
The Competition and Markets
Authority’s warning is a fresh blow to
StubHub as the agency is already
investigating its planned sale by eBay to
UK rival Viagogo for $4bn.
Online services that let people resell
tickets to sold-out sports events and
concerts have raised concerns that
professional touts use them to gouge
consumers. Their operators argue that
they offer a legitimate marketplace for
fans to trade unused tickets.
The CMA has been monitoring
StubHub and Viagogo since its recent
probe into the sector.
Yesterday, the agency said that
StubHub was “failing to adequately
warn people that tickets may not get
them into an event” and “using
misleading messages about ticket
availability”.
StubHub said it had “complied with
everything that the CMA requested”
after the 2018 investigation.
The CMA has opened a consultation
into Viagogo’s acquisition of StubHub
but has not yet initiated a formal inquiry.
Tim BradshawTicket racket
StubHub faces legal
threat over resales
‘This plane
will recover
with the
flying public
when airline
pilots step
on it, fly it,
like it’Serena Williams and Andy Murray at Wimbledon last year. Tennis matches are extremely popular on the resale sites— Carl Recine/ReutersPushing buttonsEmotions run high in
the battle for Thyssenkrupp— ANALYSIS, PAGE 17
Ding-dongShareholders bash Virgin
Money over executive’s pay— LOMBARD, PAGE 19
Neil
Hume
Tail
Risk
When thousands of mining executives and investors
gather in Cape Town next week for one of the industry’s
biggest annual jamborees the hot topic will be the runaway
performance of palladium.
The silver white metal — used to remove toxic emissions
from vehicle exhaust fumes — has surged more than 80 per
cent over the past year to a record of $2,500 an ounce as
supply has failed to keep up with demand from carmakers
scrambling to meet tough new standards on air pollution.
Its extraordinary price rise — mirrored by a similarly
dizzy advance for rhodium, its sister metal — has put a
rocket under the shares of South African producers Anglo
American Platinum, Sibanye Gold and I mpala Platinum.
For delegates at Mining Indaba the key question will be
whether the run can continue, or if the bubble will burst.
The metal, a critical ingredient in catalytic converters for
petrol and hybrid cars, has already faded about 10 per cent
from its high on concern that the coronavirus outbreak
could dent demand for new cars in China.
If the risk-off mood contin-
ues as the virus spreads, that
could certainly pull prices
lower, even if the fundamen-
tals behind palladium’s per-
formance remain intact.
After nearly a decade of
undersupply the market is
now critically short. Bank of
America analyst Michael
Widmer reckons the metal
could go to $3,500 an ounce as demand keeps increasing
amid the push for a greener economy — China has
announced a series of new regulations on vehicle emissions
—while growth in supplies remains limited.
Production of palladium is constrained because it is
mined as a byproduct of platinum and nickel — commodi-
ties where new projects have been few and far between.
Palladium miners are churning out less metal now than
they were in 2004, according to BofA.
And while substitution — swapping palladium for
cheaper platinum — is a possibility, carmakers seem to be
in no mood to cut corners, given past scandals with defeat
devices and f ake declarations. “This suggests that the rally
may continue exponentially up to the point where some
substitution occurs, more secondary metal hits the market
or more stock is released,” said Mr Widmer.
However the market develops, the need to cut pollution
is likely to be permanent. Indeed, the growth of electric
vehicles could have a big impact elsewhere, such as on
cobalt, a battery material. Like palladium, cobalt is mined
as a byproduct (of copper) and supply is concentrated in
the Democratic Republic of Congo, one of the most impov-
erished and politically volatile countries in Africa.
Decarbonisation might even lift platinum, which is lan-
guishing at less than $1,000 an ounce, if China’s plans for
hydrogen-powered fuel cell vehicles become a reality.[email protected]Analysts reckon
palladium could
go to $3,500 anounce, driven by
the push for agreener economy
JANUARY 30 2020 Section:2Front Time: 29/1/2020 - 20: 02 User: karen.crawcour Page Name: 2FRONT, Part,Page,Edition: LON, 13 , 1