Flagship shopping centre may have to close
ALL of its shopping centres face closure without rescue deal
ONE of Scotland’s biggest shopping centres may be forced to shut due to the economic fallout from the Covid-19 pandemic.
The Braehead centre, near Glasgow, is under threat along with Intu Properties’ other flagship malls, including Manchester’s Trafford Centre.
The group, which also owns Lakeside in Essex, confirmed it has put administrator KPMG on stand-by and is negotiating with lenders for a possible debt waiver.
Intu has until Friday – when financial tests are due on its lending deals – to secure furrisk ther breathing space for its finances.
The company is hoping to arrange a so-called standstill agreement for up to 18 months, but said that at this stage it is unlikely to be for more than 15 months.
It warned that if it cannot reach an agreement and is placed in administration, without critical upfront funding from its lenders, ‘there is a that centres may have to close for a period’.
Shopping centres have been open only for essential retail services amid the lockdown.
Intu said its financing talks included looking at changes to how shopping centres are funded, to allow them to pay for staff, such as security and health and safety. The company is due for updated valuations of its shopping centres this month, which could see it breach lending agreements.
Intu has a net debt of £4.69billion and suffered losses of more than £2billion last year. Its shares have collapsed in value.
SHOPPING centres owner Intu has put administrators on stand-by as it battles to avert a collapse.
The landlord, which owns Manchester’s Trafford Centre and the Braehead Centre near Glasgow, is desperately seeking debt relief from its lenders ahead of a deadline on Friday.
Intu has been laid low by a £4.5bn debt mountain and the coronavirus crisis, which has starved it of rent from retailers who are unable or refusing to pay.
But as crunch talks about its future continue, bosses have now appointed KPMG to make ‘contingency plans for administration’ in case the negotiations fail.
Should that happen, they warned that all 14 of the firm’s shopping centres may close, unless creditors put up cash to keep them going.
Intu secured temporary relief from its debt covenants last month but this only lasts until June 26.
It now wants a longer-term ‘standstill’ deal for debt payments, as it tries to survive the brutal hit to its finances.
However, Intu said some creditors are taking a tough approach and it believes any standstill will not last longer than 15 months.
Talks are also focused on who will continue to fund Intu’s shopping centres, which are subject to complex financing arrangements, and how creditors of its individual assets will be included in any rescue plan.
Intu said: ‘This all remains subject to further negotiations, with no certainty as to whether Intu will achieve a standstill, or on what terms or for what duration.
‘Notwithstanding the progress made with lenders, Intu has also appointed KPMG to contingency plan for administration.’
Its shares fell 4.6pc, or 0.21p, to 4.4p following the announcement, taking the stock’s losses over the past year to 94pc.
The company was valued at just over £60m yesterday, compared to its 2006 peak of nearly £13bn. A bid from rival Hammerson valued it at £3.4bn three years ago.
But in a bleak note, analysts at Peel Hunt urged investors to sell Intu’s shares and said they saw little reason for optimism. ‘Whilst this announcement may be an attempt from Intu to assert pressure and publicity on the bondholders, we still struggle to see any value in the equity,’ they told clients.
Intu was founded in 1980 by British-South African businessman Sir Donald Gordon as an offshoot of a life insurance business, merging with rival landlord Capital & Counties in 1992 before demerging again in 2010.
The top shareholder is billionaire John Whittaker’s Peel Group, which has a 27.3pc stake, acquired as part of a deal that also saw it sell the Trafford Centre to Intu in 2011. Whittaker developed the shopping centre, which still houses his office, and it had long been seen as a jewel in his empire, which spans retail, airports, ports and wind farms.
The tycoon, who is Intu’s deputy chairman, is worth an estimated £1.6bn, according to the Sunday Times Rich List.
But his stake in Intu has plunged by £260m in value over the past year to just £17m.
It has been speculated that the billionaire could lead a cut-price takeover of the company.
However his bid with a consortium to take it private for £2.9bn in 2018 failed.
Intu and other landlords are also expecting more grim news today, when the latest round of quarterly rents is due.
Credit agency Moody’s said it expected most to collect less than half of what they are owed.
Intu previously said it was only able to collect 40pc of those due in March.