The shopping centre owner says the move is a ‘contingency’.
Intu, which owns some of the UK’s largest shopping centres, has now officially appointed administrators as the 26th June deadline for additional funding draws near. KPMG, administrator-in-waiting, is reportedly seeking £12m of additional funding according to Sky News.
Intu has taken out loans secured against the group company, but also against its individual shopping centres, and has structured itself so it buys services such as shopping centre support staff from other Intu group companies.
The group had also requested an 18-month standstill to grant relief from covenant tests and payments on debt facility maturities.
In January, bosses had warned that the group’s £5b debt was too high, and that it was in the process of selling off assets to reduce it. Then came Covid-19. Temporary store closures, forced by the crisis, have led to Intu receiving only around 30% of its usual rental income this year, adding to its significant financial worries.
It’s been reported that insolvency would trigger one of the most complex administrations in Britain’s property industry for years. Intu has a complex corporate structure, with 20 shopping centre assets owned by separate special purpose vehicles, against which the listed parent company borrows money to fund its operations.
The company employs 2,300 people directly, but a further 102,000 people are employed in its 17 UK shopping centres – a figure that equates to 3% of the total UK retail industry workforce. At its Metro Centre mall in Gateshead, the headcount comprises 7.5% of the entire local workforce, while that figure rises to 8% at Lakeside.