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Lakeside owner Intu debt talks fail, raising prospect of administration

Yadarisa Shabong/Bengaluru
Filed on June 26, 2020
Intu employs around 2,600 staff and has hundreds of retailers in its centres. -Reuters

Shares collapse nearly 40% to record low.

One of Britain's biggest mall owners Intu has failed to reach a debt standstill deal with its creditors, it said on Friday, raising the possibility it will go into administration with the closure of some of its shopping centres.

The owner of Manchester's Trafford Centre and Lakeside in Essex had lined up KPMG as administrator in the event it could not reach a deal before Friday's deadline.

Its London-listed shares slumped nearly 40 per cent to a record low of 2.38 pence, valuing the company at around 32 million pounds.

While Intu, which employs around 2,600 staff and has hundreds of retailers in its centres that get millions of visitors a year, was concerned about its financial prospects earlier this year, it would be among the first high profile victims in the property sector from the pandemic slowdown.

With net debt of around 4.69 billion pounds last year, the debt waiver Intu secured in early-May expired on Friday, triggering a breach.

"The Board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders," it said, adding that it is likely to involve the appointment of administrators.

The company began talks with creditors in May and it had said the main sticking points of the discussions were the duration of a standstill, how much creditors would share in any future recovery and funding.

"Unfortunately, insufficient alignment and agreement has been achieved on such terms," it said.

In recent years, Intu has been hit by company voluntary agreements from brands including Debenhams, Toys R Us, House of Fraser and HMV.

The pandemic has put a further stress on its finances as rental payments collapsed due to the lockdown that forced retailers to shut stores for nearly three months.

Intu's lenders include Bank of America, HSBC, Barclays, Credit Suisse, Lloyds, Natwest and UBS. - Reuters

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