Brixton are reported to be likely to go for a debt-for-equity swap as a solution to their covenant problem.
The Wall Street Journal reports that Harm Meijer, of JP Morgan, believes they will complete a £300m debt for equity swap before the summer to provide liquidity, avoid debt covenant breach, and refinance debt.
Brixton says that it is still looking at all options. WSJ reports that they have been lobbying shareholders to support a rights issue, but that the response has been less than enthusiastic.
And while trading remains strong, according to Brixton's recent results announcement, WSJ reports vacancies may present a problem going forward. "There is quite an overhang of new stock at the moment and there is no significant prospect that this situation will change in the next 18 months," Keith Dowley, head of agency and development business for U.K. office and industrial property at CBRE told the WSJ.
A prime example of the dilemma, Mr. Dowley says, is X2, the two-storey warehouse completed 18 months ago. It opened just as the financial crisis hit with full force. The building remains empty even though Brixton has, he says, dropped the rent to £13 a square foot from £17 a square foot.