Intu pleads for extra £12m in emergency funds
The crisis at Intu is continuing with a report that its potential administrator, KPMG, is seeking £12 million in emergency funding to help the shopping centre giant continue operating during an insolvency process.
The company hasn't actually appointed administrators and is continuing with urgent debt talks, but it's widely expected to go into administration if those talks fail, with KPMG running the process.
Intu, which owns a raft of the UK's best known shopping malls such as Lakeside in Essex, Metrocentre in Gateshead and the Trafford Centre in Manchester, would reportedly be unable to continue operating part of its giant estate without the extra funding.
Non-essential shops in the UK will be allowed to open from Monday and many shopping centre owners and operators are gearing up to restart their businesses after almost three months in near-hibernation. But aside from the worries over hygiene measures and how keen shoppers will be to return to physical shops, Intu also faces an existential threat.
Sky News reported the news of the funding plea. It also cited an unnamed insider saying the funding request was designed to “focus minds” as the property giant’s lenders consider whether they’ll allow it an 18-month standstill on its massive £4.5bn of debt.
“Administration would be an expensive option,” they also said. That's partly due to the complexity of the ownership structure at Intu as its 20 shopping centre assets are owned by a number of separate vehicles and the parent company borrows money against those to fund its ongoing operations.
The theoretical cut-off date for the firm as far as the debt talks are concerned is June 26 as that's when it would be in breach of certain covenants. But insiders are also saying that any standstill would need to be agreed several days before that. It means that the company probably has around 10 days in which to ensure its survival in its current form.
The company directly employs around 3,000 people but also has more than 130,000 people whose jobs are linked to its operations, either in its own supply chain or in stores within its malls.
The firm has published figures showing that if it can get the standstill agreement on its debts, it would have enough cash to continue operating, even if it fails to collect all of the rents that it's due.
And it's certainly in its lenders' interests to keep it going, given both the complexity of any insolvency process and the difficulty of finding an asset manager with its experience to take over the various shopping centre properties.
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