intu warns shopping centres could close if it enters administration
intu has warned that its shopping centres may have to close in the event of it falling into administration – something which could happen as early as this week.
The struggling shopping mall operator, which owns the part-demolished Broadmarsh centre in Nottingham, as well as the Victoria Centre in the city, and part-owns a Derby venue, has confirmed it is in discussions with lenders about a standstill agreement, which, at this stage intu says won’t extend past 15 months. The firm had originally asked for an 18 month agreement.
intu has also confirmed that it has appointed KPMG to put together a contingency plan for administration.
In a statement this morning, intu said: “Notwithstanding the progress made with lenders, intu has also appointed KPMG to contingency plan for administration. In the event that intu properties plc is unable to reach a standstill, it is likely it and certain other central entities will fall into administration. In this situation, all property companies would be required to pre-fund the administrator to provide central services to the shopping centres. If the administrator is not pre-funded then there is a risk that centres may have to close for a period.”
Meanwhile, the firm which won the contract to demolish the intu Broadmarsh shopping centre ahead of its redevelopment has said the work has been “cancelled” – and that it will be forced to shed jobs.
The Coleman Group says it will be undertaking an internal review and will be making redundancies after the demolition work on the Broadmarsh was cancelled following stricken mall operator intu’s debt crisis. Coleman Group says the contract was its largest single project. Other projects paused but not cancelled include work at Euston station for HS2, the Coventry Point office block deconstruction, and work for the National Grid.
TheBusinessDesk.com understands it is the first time that the Broadmarsh plans have been described as “cancelled”.
A consultation programme on the level of redundancies is currently underway which will determine which roles are at risk. Where possible headcount reduction will be achieved through voluntary redundancies, said the Birmingham firm, which employs 212 people.
Group chief executive Mark Coleman said: “It is devastating that good people will be leaving us as a result of this restructure, but like many other businesses in the UK we have faced the most difficult and challenging trading conditions of our lifetimes.
“We foresee our business as operating more efficiently with an annual revenue of £12 million – £15 million, compared to the current level of £25 million.
“We see a future where our management expertise remains at the core of our capabilities. By leveraging industry partnerships, we will become more cost-effective and flexible.”
Coleman added: “After 57 years in this business we have a wealth of knowledge, robust client relationships and a strong heritage to draw on. We will emerge from this restructure not just nimbler – and with a more scaleable model – but as leaders in the use of technology and smart partnerships to deliver the most efficient and effective results for our clients.”
Meanwhile, intu could file for administration as early as Friday, according to Property Week. The trade publication said that intu is holding talks with its lenders this week.
