Coronavirus: Intu 'administrator' seeks 拢12m funding
KPMG has asked Intu鈥檚 creditors for the sum to keep it operating through an insolvency process, Sky News learns.
Thursday 11 June 2020 12:33, UK
The administrator-in-waiting to Intu Properties, Britain鈥檚 biggest shopping centre-owner, is seeking a multimillion pound funding line to keep some of the country鈥檚 best-known malls open during an insolvency process.
Sky News has learnt that KPMG has asked bondholders in the vehicles which directly own the Intu Metrocentre in Gateshead and Manchester's Trafford Centre for up to £12m in additional funding.
City sources said that without the money, it might not be possible for Intu to continue operating some of its UK shopping centre estate during an administration process.
An insider said the funding request was designed to "focus minds" as Intu's lenders decide whether or not to grant an 18-month standstill on the company's £4.5bn debt mountain.
"Administration would be an expensive option," they said.
People close to Intu say a standstill would need to be agreed several days before a June 26 cut-off date in order to take effect in time, which means that the UK's largest shopping centre group has no more than ten days to secure its immediate corporate survival.
Last weekend, Sky News revealed that Intu had lined up KPMG to act as administrator if the company and its plc lenders fail to agree a deal.
Retail property-owners have been plunged into crisis by the coronavirus pandemic, with their sites closed for the last three months.
Intu also owns Lakeside in Essex, and directly employs close to 3000 people.
Its insolvency would be one of the most complex seen in Britain's property industry for years - and spark fears for a wider commercial real estate sector which has been ravaged by the coronavirus crisis.
The company has a complex structure, with its 20 shopping centre assets owned by separate special purpose vehicles against which the listed parent company borrows money to fund its operations.
The company has about £4.5bn of debt, but was trading on Thursday morning with a market capitalisation of barely £100m.
It is one of the London stock market's worst performers, with its shares down more than 90pc during the last year.
The company is an important player in some of the UK's largest regional economies, with 102,000 people working in its 17 UK shopping centres.
Another 30,000 people work in Intu's broader supply chain.
Last week, Intu published figures showing that a standstill agreement would leave it with enough cash to continue operating, even after a calamitous rent quarter day in March, when it received less than a third of the money it was owed by retail tenants.
The COVID-19 pandemic has prompted a vast chunk of Britain's retail industry to withhold rent payments, with names such as Sir Philip Green's Arcadia Group, Boots The Chemist, New Look and McDonald's choosing not to pay landlords.
June's quarter day, in a fortnight, could be even bloodier for the balance sheets of retail landlords like Intu and Hammerson, which owns big shopping centres in Birmingham and Brent Cross.
In recent months, bondholders within the various Intu SPVs have appointed advisers to represent their interests as a full-scale financial restructuring has become inevitable.
Even if the listed parent company is forced to appoint administrators, the implications for its individual assets are far from clear.
People close to the company believe its lending syndicate is likely to demur from forcing it into insolvency because of the potential value destruction that would occur.
Securing alternative managers of large shopping centres as the retail sector attempts to recover from COVID-19 would be an uncertain process, according to insiders.
It is unclear whether an alternative asset manager with Intu's expertise or negotiating power would be available.
The company's fall from grace has been startling.
It was a constituent of the London stock market's FTSE-250 index until last year.
Its largest shareholder is John Whittaker, the Peel Group magnate who sold the Trafford Centre to what was then called Capital Shopping Centres in 2011.
Mr Whittaker could emerge from a restructuring of Intu owning the Manchester shopping destination again.
Earlier this year, Intu tried to raise £1.5bn from an emergency equity-raising, but found its hopes dashed amid turmoil in financial markets caused by the developing coronavirus crisis.
The company recently brought in David Hargrave, a restructuring veteran, to oversee its efforts to stay afloat.
Intu and KPMG declined to comment.