Shopping centre operator Intu Properties collapsed into administration after it failed to secure an agreement with its lenders.
The company has debts of more than £4.5bn and was unable to persuade lenders to grant a standstill on debt repayments before a Friday night deadline on 26 June.
The company employs nearly 2,400 people and owns 17 shopping centres across the UK, including Lakeside in Essex, the Trafford Centre in Manchester and Gateshead’s Metrocentre.
Accountants KPMG have been appointed to handle the administration of Intu and eight subsidiary companies.
The shopping centres around the country would continue to trade as normal while the future of the malls is resolved.
Jim Tucker, a partner at KPMG and one of the joint administrators, said: “Intu owns many of the UK’s biggest and best-known shopping centres. The challenges affecting UK retail are well known and have been exacerbated by the impact of COVID-19 and the resulting lockdown.
“As today’s administration makes clear, those challenges have fed through to owners of retail property, even to owners of high-quality shopping centres such as Intu’s.”
Intu’s shopping centres are owned individually by special purpose vehicles that were outside of the insolvency process and thus able to trade as normal under the control of their directors.
The company’s creditors have agreed to make up to £12m available to keep the company’s centres open as the administration process is played out.
The group is essentially a holding company with £4.5bn of borrowing spread over 21 separate debt instruments. Intu’s lenders, includes Bank of America, Barclays, Credit Suisse, HSBC, Lloyds Banking Group, NatWest and UBS.
Two years ago shares in the former FTSE 100 company were changing hands at 200p. By 26 June shares were worth just 2p before the administration triggered their suspension.
Malls such as the Trafford Centre, Lakeside and The Mall at Cribbs Causeway, Bristol are likely to attract potential buyers, but smaller regional malls – such as The Potteries centre in Stoke-on-Trent – may prove harder to sell.
In addition to Intu’s employees, another 100,000 workers are employed by its tenants, who include companies such as Marks & Spencer, Next and H&M.
Prior to collapse, Intu had been seeking debt standstill agreements with some of its lenders as it battles for survival after a collapse in rental payments from retailers.
Like other shopping centre operators, Intu had faced problems before the coronavirus pandemic. Key tenants such as Debenhams, House of Fraser and Topshop had closed stores and sought rent cuts to manage their own problems.
After lockdown had taken effect, Intu received just 29% of the revenue it was due on rent day. UK retailers are estimated to have paid just 14% of the £2.5bn quarterly rent due last month as they try to conserve cash and negotiate new, lower rent deals.
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