The struggling shopping centre owner has appointed KMPG as administrator after it said talks with creditors had reached “insufficient alignment and agreement”.
A statement from the company said: “Further to the announcement made earlier today, Intu Properties announces that application is being made for James Robert Tucker, Michael Robert Pink and David John Pike of KPMG to be appointed as joint administrators to Intu and several other key central entities in the Intu Group. The appointment is expected to become effective shortly.”
Earlier this week, Intu gave an update on shareholder talks, ahead of a deadline of midnight tonight.
Intu Properties last month issued a request to postpone certain debt obligations for a maximum period of 18 months to help fix its balance sheet, in a ‘standstill agreement’.
Then, on 8 June, the shopping centre landlord put professional services firm KPMG on stand-by as administrator, should it fail to renegotiate terms with its lenders.
Throughout this week, the shopping centre portfolio owner has been discussing with lenders and shareholders several points needed to agree a standstill.
Assets in the North West include Manchester Arndale, which Intu owns in a joint venture with M&G Real Estate, and the Trafford Centre, which is potentially set to be bought by British Land, according to market rumours.
Intu has long been battling financial woes, including around £4.5bn in debt and £2bn of losses reported for the 2019 financial year. Market uncertainty during the Covid-19 pandemic has hit the country’s retail sector, compounding Intu’s already dicey financial situation.
Points under discussion during the past week have included the length of the proposed standstill period, with some stakeholders wanting a term of less than 18 months as they are wary about the speed at which the retail sector could bounce back.
“At this stage it is not expected that the duration will exceed 15 months”, a statement earlier this week said. The shareholders were also debating the extent to which creditors will share any future recovery in the company’s valuation.
A statement from Intu to the stock market this morning said: “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.”
Intu’s board includes deputy chairman John Whittaker, who owns a 25% stake after he sold the Trafford Centre, developed by Peel, to the company in 2011.
The share price in Intu this morning was 3.91p.