Merry Hill owners intu puts administrators on stand-by amid debt woes
The owners of the giant Merry Hill shopping centre are to have crisis talks with lenders with the shadow of a potential administration looming
Debt-hit intu Properties has put KPMG on standby to handle a potential insolvency process.
It is seen as a contingency plan in case lenders do not give the Brierley Hill shops complex's owner breathing space to pay back debts reported to have grown to £4.5 billion.
Intu, which has declined to comment on the reports, operates 17 shopping centres across the UK including Lakeside in Essex and Manchester's Trafford Centre.
It is to have talks over its debts with banks that have already agreed a waiver of covenant tests, which expires on June 26.
Intu has appointed KPMG to help prepare for the eventuality of administration if chief executive Matthew Roberts cannot achieve a standstill agreement of up to 18 months to give it the space to fix the firm’s balance sheet as market conditions normalise and avoid repayments to banks and bondholders which could tip intu Properties, which has 2,000 staff, over the edge.
It will know if an agreement can be reached within the next couple of weeks.
In the meantime centres, including Merry Hill, will be operating as usual with many of the non-essential shops preparing for reopening on June15.
Before the coronavirus crisis hit, intu was already struggling from shifts towards online shopping and the closure of non-essential shops hit rental income.
Rent income was down to just 40 per cent for the last quarter.
Intu's shopping centre footfall had been better than the industry average in the first eight to 10 weeks of 2020 and the company was successfully recruiting new tenants for units in its centres.
Merry Hill is currently in the midst of a £10 million programme to modernise the facade, reconfigure the entrance layouts and install energy-saving LED feature lighting and large media screens.
The modernisation programme, which is due to be completed in the third quarter of 2020, has been continuing during the lockdown.
A range of additional safety measures have been implemented inside the centre to ensure social distancing.
Shoppers are asked to follow a marked route and to keep two metres apart at all times. Hand sanitisation stands have also been placed at key points throughout the centre.
Intu's shares stood at 9.26p at the close of trading on Friday. They are up from an all-time low of 3.21p in March but are down 95 per cent over the last five years.
