Intu, the troubled property giant that owns popular shopping malls such as Lakeside and Metrocentre, is on the verge of administration as discussions with its creditors continue. The company is in desperate need of a standstill agreement with certain creditors by June 26 to address its existing financial difficulties, which have been exacerbated by tenants not paying rent during the lockdown. If this agreement cannot be reached, Intu has already enlisted the help of KPMG to prepare for administration.

In the unfortunate event that Intu does go into administration, the company has made it clear that all property firms would need to pre-fund the administrator to ensure that central services can be provided to the shopping centers. Failure to pre-fund the administrator may lead to the closure of as many as 17 malls, which would have devastating consequences for both Intu and its tenants who have recently reopened their businesses.

There are still several unresolved issues being discussed with creditors, including the duration of the standstill agreement. While Intu initially proposed an 18-month agreement, some creditors are pushing for a shorter timeframe. The company has reassured that the duration will not exceed 15 months. Creditors are also seeking compensation or benefits in return for agreeing to the standstill arrangement, such as converting debt to equity.

Another major challenge is funding the operations of individual shopping centers. Intu has reported a drop in rent collections due to the impact of Covid-19, and certain centers are facing difficulties in paying for necessary support services, including shopping center staff, as cash is trapped within their financing arrangements. This is particularly problematic for centers funded by bond structures, as securing additional funding is proving to be extremely challenging. In order to address short-term liquidity needs, approval will be sought from stockholders to release specific funds.

The complex ownership structure of Intu has only added to the complexity of the situation. However, as the June 26 deadline draws near, it is expected that further developments and clarity will emerge in the coming days.

Intu prepares for administration as talks with creditors continue
Intu seeks standstill agreement with creditors