26th Jun 2020 14:12
(Alliance News) - Intu Properties PLC on Friday said it has appointed administrators after failing to reach an agreement over financial restructuring with its lenders.
The company, which operates 17 shopping centres in the UK and three in Spain, said that it has appointed James Tucker, Michael Pink and David Pike of KPMG LLP as joint administrators of intu and several other key central entities in the intu Group. The appointment is expected to become effective shortly.
Shares in the company in London and Johannesburg have been suspended from trading.
Intu, however, said that its underlying group operating companies remain unaffected by the administration and all shopping centres are continuing to trade.
"The intu group's relationships with its tenants are with these operating companies, not the companies entering administration," the company explained.
"The shopping centre operating companies have or are expected to enter into transitional services agreements with the Administrators of the central entities to ensure continuity of service provision by the central entities to the individual shopping centres," Intu added.
Earlier on Friday, the owner of Lakeside shopping centre in Essex had said talks with its creditors over a standstill-based agreement fell through.
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 morning had 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]
Updated by Tapan Panchal; [email protected]
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