intu seeks standstill as it risks covenant breaches

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intu seeks standstill as it risks covenant breaches

Published Date: 2020-05-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

intu seeks standstill as it risks covenant breaches

The shopping centre owner says once the market has normalised there will be a greater opportunity to explore alternative capital structures and solutions.

intu Properties is trying to get its lenders to agree to a debt standstill until the end of the year as it risks breaching loan agreements amid lockdown conditions in the UK.

In an update, the shopping centre owner said it had been in discussions with its lenders since the beginning of the month to find a solution to fix its balance sheet over the medium term. In the meantime, uncertainty over the impact of Covid-19 on its centres continued. Apart from essential stores, they remained semi-closed until at least 1 June. It also remained unclear how quickly the UK would recover once it came out of lockdown, it said.

intu said the impact of the Covid-19 lockdown on rental collections and valuations at the end of June was likely to result in breaches of covenants or material liquidity requirements.

intu said the best course of action and its primary focus to maximise value was to reach standstill-based agreements with relevant financial stakeholders across its structures as it would provide a stable environment to address the situation. The arrangements would seek relief from financial covenant testing, debt amortisation and the repayment of debt facilities as they matured until the end of the year. It also wanted interest to be repaid on a 'pay if you can' basis. Once the situation had normalised it said there would be greater opportunity to explore alternative capital structures and solutions and disposals to ultimately fix its balance sheet.

intu said there was no certainty as to whether any standstill could be achieved with all or some of its creditors or the terms that would be agree on. In the meantime it said it was possible that earlier individual breaches could occur over the coming weeks.

In March, intu cancelled a proposed rights issue to raise £1 billion to £1.5 billion capital due to a lack of support from potential investors. However, at the time it said it still had a range of options including an alternative capital structure and more asset disposals.

Its shares fell 3.9% to 99c yesterday.





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