Intu Properties said on Friday it was likely to go into administration after the shopping centre owner failed to secure an agreement with its creditors.
The company, whose centres include Lakeside in Essex and the Trafford Centre in Manchester, has debts of more than £4.5bn and said it had been unable to persuade lenders to grant a debt repayment holiday before Friday night’s deadline. The company owns a total of 17 shopping centres across the UK.
On Tuesday, Intu had warned that if talks with creditors broke down it was headed into administration and that it had appointed the accountancy firm KPMG to handle the process. The company’s complex finances meant the administrators would have to be paid upfront, the company said, and if it could not find the cash to do so said its malls might have to close for a short period.
In a statement on Friday, the company said: “Since that update, discussions have continued with the Intu Group’s creditors in relation to the terms of standstill-based agreements. Unfortunately, insufficient alignment and agreement has been achieved on such terms.
“The board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders. This is likely to involve the appointment of administrators.” It promised a further announcement would be made “as soon as possible”.
Intu directly employs about 2,500 people and had furloughed 60% of employees in its malls and 20% of those at its head office. Its share price has collapsed by more than 90% over the past year and is currently trading under 5p.
Any sale process will be complicated by the complex structure of the group and, if a buyer for the whole company is not forthcoming, its assets could end up being sold off separately.
Intu owns nine of the top 20 shopping centres in the UK. Malls such as the Trafford Centre, Lakeside and Gateshead’s Metrocentre would probably attract potential buyers, although its smaller regional malls may prove less popular.
The group, which also has two shopping centres in Spain, was struggling before the coronavirus pandemic as a result of its debt pile and the fact that some of its biggest tenants, including Debenhams, House of Fraser and Topshop, closed stores and demanded rent cuts so that they could stay in business.
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