One of the UK’s biggest shopping centres owners Intu Properties said it has appointed administrators as a “contingency” in case rescue talks to restructure its £4.5bn debt mountain fail.
The firm, which owns the Trafford Centre in Manchester and Lakeside in Essex (pictured), has been in talks with lenders since March to agree new funding for around the next 15 months.
However, the shopping centre owner, which has seen rent payments hit by the coronavirus pandemic sees a revolving credit facility covenant waiver end on Friday.
The business said in a statement it has “appointed KPMG to contingency plan for administration”.
It added: “In the event that Intu Properties plc is unable to reach a standstill, it is likely it and certain other central entities will fall into administration.”
Intu stock has collapsed by more than 90% over the past year and is currently trading under 5p. Shares slipped a further 2.4% to 4.5p on Tuesday’s announcement.
The firm wants to agree a debt deal with its banks, that would mean it would not have to begin to pay back what it has borrowed until the end of 2021. It also wants a pay-if-you-can interest arrangement.
But the company added there was “no certainty as to whether Intu will achieve a standstill, or on what terms or for what duration”.
The group owns 19 shopping centres in the UK and Spain, but is valued at just over £60m. Last year the business brought in revenues of £542m.
Intu said it did not have enough cash to ensure its centres remain open during the insolvency process if it should fall into administration.
But added it was trying to arrange a system that would provide money to KPMG in order to avoid closing its shopping sites.
The group was struggling even before the health crisis as some of its biggest tenants including Debenhams, House of Fraser and Topshop closed stores and demanded rent reductions.