Talks with creditors collapse as intu prepares for administration

Trafford Centre

Talks between shopping centre operator intu and its lenders have collapsed, leaving the future of its North West malls in doubt.

The company announced this morning that discussions over installing a standstill agreement on its revolving credit facility had ended in “insufficient alignment” on terms.

Intu warned earlier this week that if it fell into administration it might have to close its shopping centres.

It has appointed KPMG to prepare itself for the process.

The struggling shopping mall operator, which owns the Trafford Centre and Arndale shopping mall in Manchester, had confirmed that it was in discussions with lenders about a standstill agreement, which, intu said wouldn’t extend past 15 months.

The firm had originally asked for an 18 month agreement.

A statement from intu this morning said: “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.

“A further announcement will be made as soon as possible.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “It appears time is up for shopping centre owner intu Properties.

“Already in a sorry state before coronavirus, the pandemic and effective shuttering of its sites has tipped it over the edge.

“With the expiry on a debt covenant waiver expiring at midnight and little sign of an agreement being reached with its lenders, calling in the administrators looks an inevitable next step.

“A constituent of the FTSE 100 as recently as 2017, the company is now a penny stock and valued by the market at less than £20m.

“This is an acknowledgement from investors that the company’s net borrowings of more than £4.5bn will swallow it up.

“Some of the factors which have led the company to this point have been out of its control, but others have been of its own making.

“A shift to online shopping has hit rental income and valuations at its out-of-town shopping malls and COVID-19 has clearly had a devastating impact.

“However, the business took on too much debt and, in hindsight, was buying up assets at the wrong time in the early to mid-2010s.

“The fact several suitors took a look at the business in the last couple of years before walking away should have set alarm bells ringing.

“The chances of a white knight riding to the rescue are practically non-existent at this point, with the future of intu’s assets likely to be more akin to vultures picking over its carcass.”

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