The Trafford Centre owner has hired ‘Big Four’ turnaround consultant David Hargrave to help it restructure its business after reporting £2bn of annual losses in March.
Intu Properties also pledged to take “more robust action” to collect outstanding rent due for the first quarter of the year because negotiations with some occupiers have stalled.
Hargraves, a former partner at professional services firms PwC and EY, has been appointed chief restructuring officer at Intu, as the shopping centre owner continues to struggle with financial difficulties compounded by low footfall and store closures in the current climate.
As part of his appointment, Hargraves will also join Intu’s board as a non-executive director.
It was reported this week that disgruntled Intu investors were considering a plan to take control of some of the company’s assets, from which they claim not to have received significant returns.
Intu almost doubled its losses in the year to 31 December 2019, to £2.2bn, attributed to “continued negative investor sentiment towards retail and retail real estate”, and a revaluation of its portfolio that resulted in a deficit of £1.9bn.
It said the following week it was exploring options to fix its balance sheet and pay down around £4.5bn in debt, and aimed to work out a turnaround strategy “over the coming weeks”.
In a statement to the London Stock Exchange today, the firm announced Hargraves’ appointment and said it had reached an agreement on interest rate swaps, a form of debt, that had a mandatory break at the end of April.
Under the agreement, Intu will not have to pay the outstanding amounts needed to close the swaps until 26 June at the earliest. The company said it has also negotiated certain waivers on other debt obligations as it struggles to collect rent from some of its retail occupiers in current conditions.
At the end of March, Intu told shareholders it had received only 29% of rents due for the first quarter, compared to 77% in the same period last year, and today said it has received 40% of total Q1 rents due.
“We are now offering monthly rents to the end of 2020 and are in advanced discussions with customers representing a further 28% of the amounts due,” the statement said.
“However, there are a very small number of cases where customers are not engaging with us to find a consensual solution – these are large, well-capitalised brands who have the ability to pay but have chosen not to.
“In these instances, we are prepared to take more robust action to enforce the legally binding terms of those leases.”
Intu described its latest actions to bolster the company as “another step forward that will allow us to extend our engagement to key stakeholders at the asset level as we explore all options, including potentially seeking standstills to overcome the current market dislocations.”
“This forms part of our ultimate strategic objective to fix the balance sheet over the medium term, and we will make further announcements as appropriate,” Intu said.