Shopping Giant Intu Goes into Administration
The company had been hoping to get a delay in having to pay off debts but could not reach agreement with lenders. Rescue talks at shopping centre owner Intu have failed to reach agreement and the company has gone into administration.
Newcastle Business Live is reporting that the company, which owns some of the UK’s biggest retail centres, including the Trafford Centre in Manchester and the Gateshead Metrocentre, had been trying to get lenders to agree a “standstill” agreement of up to 18 months to give it relief on its debts.
The firm had revealed earlier this week that it had put accountants KPMG on standby in case of failure to reach agreement. At lunchtime it revealed the talks had failed and administrators were being appointed. Shares in the company on the London and Johannesburg stock exchanges have been suspended.
The move comes after a bruising period for the company which it was the subject of two abandoned takeover attempts, and had seen efforts to pay off massive debts stymied by a huge drop in rents paid during the coronavirus outbreak.
Intu had asked its lenders for a “standstill” agreement of up to 18 months where it would be given relief on its debts topping £4.5bn.
In a statement, the company said: “On 1 May 2020, intu announced a waiver to certain potential breaches in respect of its revolving credit facility until 11.59 p.m. on 26 June 2020, and that it was engaging with key stakeholders of the intu Group at both the asset and Group level to explore all options, including potentially seeking standstills to overcome the current market dislocation.
“Discussions have been ongoing with financial stakeholders to achieving standstill-based agreements. However, insufficient alignment and agreement in relation to the terms of such standstill-based agreements has been achieved with financial stakeholders ahead of the above deadline.
“As such, application is being made for the Administrators to be appointed to intu and several other key central entities in the intu Group.”
Intu employs about 3,000 staff across the UK, while a further 102,000 work for the shops within its shopping centres.
The company’s shopping centres reopened to shoppers last week with new measures in place to ensure physical distancing.
But the number of vacancies in the centres has risen during the crisis as retail and restaurant chains have gone bust, while other firms are seeking reduced rents due to their own struggles.
Three of its centres were dealt a significant blow last month when Debenhams said it would not reopen in the Gateshead Metrocentre, plus centres in Milton Keynes and Watford.
The problems facing the retail industry were revealed in a report from the CBI on Thursday, which showed that retail sales sank by 37% in the year to June.
The survey revealed an “extremely negative” forecast from retailers which have been able to reopen from June 15, with the vast majority of respondents expecting sales to be lower compared with July 2019.