Lockdown pushes shopping centre giant Intu to brink of collapse
A shopper walks through an almost deserted shopping mall at the Intu Trafford Center on the outskirts of Manchester, England. Photo: Oli Scarff / AFP via Getty Images
The owner of the Intu shopping center (INTU.L) is on the brink of collapse after failing to reach agreement with the creditors.
Intu Properties, which owns the Trafford Center in Manchester and the Lakeside shopping center in Essex, said on Friday that it was "likely" to appoint administrators before midnight on June 27 before the debt repayment deadline.
The shares fell 50% and were trading at just 1.8p. The company was only part of the FTSE 100 in 2017, but is now valued at just £ 20m ($ 24.8m).
Intu said earlier this week that KPMG had been set up as administrators in the event that discussions with creditors failed.
The company struggled with £ 5bn of debt before the outbreak of the COVID-19 crisis, but the pandemic made the problem worse. Intu collected less than a third of the rents owed by tenants in its shopping centers in the first quarter of 2020, making it difficult to repay its large mountain of debt.
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"Even before the coronavirus was in a sad state, the pandemic and effective shuttering of its locations had gone over the edge," said Russ Mold, investment director of stockbroker AJ Bell, in an email.
“Some of the factors that led the company to this point were beyond his control, but others were beyond him.
“The move to online shopping has impacted rental income and reviews in out-of-town malls, and Covid-19 has clearly had a devastating impact.
“However, the company took on too much debt and subsequently bought assets at the wrong time in the early to mid-2010s. The fact that several applicants had looked at the business in recent years before leaving should have sounded alarm bells. "
After the appointment, administrators will try to sell the company as a going concern. However, if no buyer can be found, the company is dissolved and its assets sold to pay off the debt. The Trafford Center and Lakeside are Intu's crown jewels, but the company owns £ 10bn of property across the UK.
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