Intu moves to fend off creditors with new proposal
Intu, the owner of the Trafford Centre and Manchester Arndale shopping centres, has said it is pursuing standstill agreements with its financial stakeholders to protect itself from a hostile takeover
The move comes after the firm said it was likely that it would breach covenants with lenders and that the prospect of any external investment had diminished, creating “material uncertainty” for any asset disposal or funding.
A standstill agreement is a contract that contains provisions that govern how a bidder of a company can purchase, dispose of, or vote stock of the target company.
It can effectively stall or stop a hostile takeover if the parties cannot negotiate a friendly deal and it comes just weeks after reports that the bondholders of debt secured against four intu shopping centres were considering taking control of the assets.
Intu is proposing standstill arrangements that would seek relief from financial covenant testing, debt amortisation and facility maturity payments for a period through to no later than 31 December 2021.
A statement from the company said: “The standstill provisions would also aim to achieve self-funded operational and financial costs only across the different property owning sub-structures, without recourse to intu properties plc for any shortfalls during the standstill period with interest being ‘pay if you can’.
“intu believes that the best way forward is achieving stability through such a standstill until the market dislocation has stabilised and asset valuations and portfolio performance can be better understood by investors and debt providers and risk can be appropriately priced. When market dislocation has passed, there will be greater opportunity to explore alternative capital structures and solutions and disposals to ultimately fix the balance sheet.
“Intu will seek to promote fairness and stability in its standstill proposals recognising there is risk of competing interests across group-wide stakeholder interests during this period of market dislocation.
“There can, of course, be no certainty as to whether any standstill can be achieved with all or some of the group’s creditors, or as to the terms.
“Whilst the standstill is the primary focus, it is possible that earlier individual breaches, under certain of the group’s financings, could occur over the coming weeks and the group will seek to address such instances as part of the wider discussions.”