Written by: Keith Tully
The owner of some of the largest shopping centres in the country has issued a statement saying it is “likely” to appoint administrators.
Intu, which owns the Trafford Centre in Manchester and the Lakeside in Essex, along with numerous other shopping centres, has been hit with major financial difficulties and is struggling to reach agreements with its various creditors.
For the past year, Intu has been working with a £4.5 billion debt pile and has seen its financial position made considerably worse by the coronavirus crisis and a sharp reduction in rental payments received from its retail tenants.
Around 3,000 people work directly for Intu but more than 100,000 are employed in the shops and other facilities found within its various retail centres across the country.
A statement given by Intu as part of an update on its creditor discussions refer to a “standstill strategy”, which the company has been pursuing in an effort to stave off financial collapse.
“Discussions have continued with the Intu group’s creditors in relation to the terms of standstill-based agreements,” the statement said.
“Unfortunately, insufficient alignment and agreement has been achieved on such items.
“The board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders. This is likely to involve the appointment of administrators.”
Advisors acting on behalf of Intu in recent days and weeks have been seeking to secure access to around £12 million in funding to ensure an orderly administration process can be carried out if administrators are called in.
The company’s representatives have warned that it could be necessary to close some of its shopping centres for unspecified periods of time unless some funding can be secured through creditors.
Commercial real estate has been hit very badly by the coronavirus crisis, with a huge number of retailers having had to close their doors suddenly and many becoming unable to pay their rents as an almost immediate consequence.
The value of Intu shares on the London Stock Exchange has plummeted by around 90 per cent over the course of the past 12 months.
It is currently unclear what the future might hold for Intu’s main assets, whose value and appeal to potential buyers is uncertain in the context of a retail sector battling to recover from the COVID-19 crisis.
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