The beleaguered Trafford Centre owner is in eleventh-hour talks with lenders to negotiate the terms of its debt repayments and will be forced to go into administration if it fails to meet the 26 June deadline.
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, known as 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.
In a statement to the London Stock Exchange today, the company said it is still discussing with lenders and shareholders several points needed to agree a standstill, with just three days to go before Thursday’s deadline.
Intu has 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 currrently include the length of the standstill period, with some stakeholders wanting a term of less than 18 months – “at this stage it is not expected that the duration will exceed 15 months”, the statement said – and the extent to which creditors will share any future recovery in the company’s valuation.
Intu’s market capitalisation has plummeted to around £61m since its peak in 2017, when rival mall owner Hammerson made a £3.4bn bid for the firm.
Finally, shareholders are discussing how the operations of individual shopping centres are to be funded. Some centres have suffered reduced rent collection due to Covid-19 and lack the means to pay for financial support.
Meanwhile, releasing additional liquidity from centres funded by bond structures is even more difficult to achieve, and consent will be required from stockholders to release money for short term needs. There is “no certainty” that Intu will achieve a standstill, or on what terms or for what duration”, according to the statement.
It warned that the company would collapse if it fails to reach a deal.
“In the event that Intu Properties is unable to reach a standstill, it is likely that it and certain other central entities will fall into administration,” the statement said.
“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, local media reported today that police were called to the Trafford Centre after an angry shareholder allegedly caused damage to the mall after his request to speak to its management refused.
A spokesperson for Greater Manchester Police was quoted as saying: “Officers had to attend the Trafford Centre to reports of a male causing issues due to him losing money after [Intu’s] share price dropped.”
Intu’s share price has fallen in the past year but was up 2% on Tuesday morning.