26th Jun 2020 08:58
(Alliance News) - Intu Properties PLC shares plunged in London and Johannesburg as talks with its creditors over a standstill-based agreement fell through, increasing the likelihood of the appointment of administrators.
Shares in the shopping centre operator fell 61% at 1.50 pence on Friday in London, while its Johannesburg shares were 70% lower at ZAR0.32.
In May, Intu had requested standstill arrangements to be put in place to prevent the breach of banking covenants of financial liquidity requirements.
In particular, the arrangements would seek relief for the group from covenant testing, debt amortisation, and maturity payments until no later than the end of 2021.
However, Intu on Friday said that "insufficient alignment and agreement has been achieved on such terms".
At the start of May, Intu announced that it had obtained a waiver for some of the breaches of its revolving credit facility until the end of Friday, while it talked with creditors and "key stakeholders" on a possible standstill.
However, on Tuesday Intu said that it had appointed accountants KPMG to form a contingency plan for administration.
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.
In early March, Intu was unable to launch a fundraise of GBP1 billion and GBP1.5 billion amid uncertainty in "equity markets and retail property investment markets", heaping pressure on the firm.
By Dayo Laniyan; [email protected]
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