Intu names restructuring head, says could take action against large brands over rents
Malls giant Intu issued an update on Friday, although it didn’t comment on earlier reported speculation that it could lose control of some of its key malls due to its debt situation. But it did say it’s prepared to get tougher with some large tenants that are withholding rents.
But the main announcement was that the company has appointed a Chief Restructuring Officer with David Hargrave taking up the new role. He joins after 20 years spent as a partner in the restructuring practices of both PwC and EY, specialising in business turnarounds across many sectors. He’s also been appointed to the board as a non-executive director.
But the announcement was frustratingly devoid of detail about what he'll be doing.
However, the company did share more information about its rent collections and said that since its update on March 26, it has continued to collect rents and service charges for the quarter and has achieved a 40% collection level.
It’s now offering its tenants the ability to pay rents monthly to the end of 2020 “and [we] are in advanced discussions with customers representing a further 28% of the amounts due”. The remainder of customers “are at various stages of discussions regarding revised payment plans”.
However, it added that “there are a very small number of cases where customers are not currently engaging with us to find a consensual solution - these are large, well-capitalised brands who have the ability to pay but have chosen not to. In these instances we are prepared to take more robust action to enforce the legally binding terms of those leases”.
The company’s shopping centres continue to operate on a semi-closed basis with only essential stores remaining open. It has furloughed around 60% of staff in the centres and around 20% at its HQ. It has also identified around £3 million of cost savings in the short term.
As far as mall disposals and cash flow are concerned, it has received final regulatory approval for the disposal of intu Puerto Venecia and is working towards closing the transaction in the middle of May.
Talks with lenders regarding a waiver of certain provisions of its revolving credit facility (RCF) have also given it some breathing space until June 26.
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