intu puts administrators on standby


intu puts administrators on standby

Published Date: 2020-06-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

intu puts administrators on standby

If it is unable to negotiate a deal with its lenders, the shopping centre owner may have to enter administration.

intu Properties has hired KPMG to prepare the group for administration in the event that debt talks with its lenders are unsuccessful. The shopping centre owner says if it's unable to reach a deal there's also a risk that some of its shopping centres may face closure.

In May, intu said it was trying to get its lenders to agree to a debt standstill until the end of the year as it risked breaching loan agreements amid lockdown conditions in the UK. The discussions were aimed at finding a solution to fix its balance sheet over the medium term. It has debt of more than £4.5 billion.

intu owns 17 shopping centres including the Trafford Centre in Manchester and Lakeside outside London. It also owns centres in Spain but has been selling some of those to reduce its debt burden. Apart from essential stores, most of the shops at its centres remained closed until 1 June when lockdown restrictions were eased in England.

The group has to get a deal in place ahead of a revolving credit facility covenant waiver deadline on Friday. Although it had made progress with lenders, it said KPMG had been appointed to contingency plan for administration. If a deal wasn't reached in time, it said funds would have to be made available to KPMG to provide central services to its shopping centres. Failing that, there was a risk that centres would have to close for a period.

The proposed deal with lenders would provide relief from financial covenant testing, debt amortisation and the repayment of debt facilities as they matured until the end of the year. It also wants interest to be repaid on a 'pay if you can' basis.

intu's shares fell 10% to R1.03 yesterday.

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