The Manchester-based developer has placed more than half of its workforce on the Government-funded furlough leave, as the Covid-19 crisis impacts its operations.
In a notice on Wednesday to holders of its latest retail bond, Bruntwood said: “In order to control costs at a time of uncertain income, the board has taken active measures to ensure business continuity in the near term.
“[A total of] 490 colleagues have been furloughed from a total workforce of 867 [representing 56% of staff]. The board has also cancelled all non-essential overhead expenditure and deferred all capital expenditure unless already linked with a committed customer transaction.”
The company also said that all dividend payments to bondholders have been cancelled “until the market returns to a more settled state”.
Companies are taking measures to cut costs and protect their businesses as the coronavirus outbreak and subsequent lockdown hits parts of the economy. Some construction projects are continuing with heightened health and safety measures in place to protect workers, while others have stalled activity for the time being.
Bruntwood said it is continuing with “fully funded pre-let or predominantly pre-let constructions”, as well as significant large-scale projects such as Circle Square in Manchester and Booths Park in Knutsford.
Work to build the Citylabs 2 biomedical research centre with Manchester Science Partnerships had been paused for two weeks following a national policy decision by the main contractor Sir Robert McAlpine. However, the parties involved have now agreed that the project will resume “imminently”, according to Bruntwood.
“There are some shortages of materials on site but contractors remain confident that they continue to make progress to resolve such issues,” the statement said.
Meanwhile, facilities at Bruntwood SciTech’s Alderley Park in Cheshire are operating as one of the Government’s Covid-19 testing laboratories, overseen by Medicines Discovery Catapult, a national science incubation network.
The economic impact of the pandemic is affecting some occupiers’ ability to pay rent. Bruntwood said as of 9 April, it had collected 67% of rents due from the quarter ended 31 March, compared to 75% at the same date in 2019.
“We are working closely with…customers to reach an agreement and will continue to closely monitor rent receipts over the coming quarter,” the statement to bondholders said.
Bruntwood raised £90.87m in March through its second retail bond. It said yesterday that, following the bond raise, it has cash reserves in excess of £25m and undrawn debt facilities of £50m, with any existing debt not due to mature until March 2022.
“The board considers there to be sufficient income and valuation headroom across Bruntwood’s debt facilities and does not expect to breach any terms relating to them,” the statement said.
Chief executive Chris Oglesby added: “Our primary focus is the health, safety and well-being of our employees, while working hard to support our customers and other business partners during this challenging period.
“The Bruntwood team is operational, working at home, with full access to our central systems and communications network.”