Intu said it is set to call in administrators today after cliff-edge negotiations with lenders failed to secure its future.
The retail landlord said “unfortunately, insufficient alignment and agreement has been achieved” with key creditors on a standstill on loan repayments, ahead of its debt waiver period expiring at midnight tonight.
Intu was already suffering from closures due to lower footfall to its shopping centres pre-coronavirus. But it has been hit badly by the pandemic as locked down retailers simply refused to pay rent.
It had lined up KPMG to step in if lenders failed to agree to new funding this week.
Today Intu said those talks have collapsed.
“The board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders,” it said. “This is likely to involve the appointment of administrators.”
AJ Bell investment director Russ Mould said “time is up” for Intu.
“Already in a sorry state before coronavirus, the pandemic and effective shuttering of its sites has tipped it over the edge,” he said.
“With the expiry on a debt covenant waiver expiring at midnight and little sign of an agreement being reached with its lenders, calling in the administrators looks an inevitable next step.
“This is an acknowledgement from investors that the company’s net borrowings of more than £4.5bn will swallow it up,” Mould added.
He pointed to the rise of online shopping hurting retailers who in turn have shut shop, hurting Intu’s rental income.
But Mould also blamed Intu for taking on too much debt and added: “In hindsight [Intu] was buying up assets at the wrong time in the early to mid-2010s. The fact several suitors took a look at the business in the last couple of years before walking away should have set alarm bells ringing.”
A consortium led by billionaire shareholder John Whittaker abandoned a £2.9bn takeover proposal in November 2018.
And Hammerson walked away from a £3.4bn purchase in April 2018 that would have created the UK’s largest property company.
“The chances of a white knight riding to the rescue are practically non-existent at this point, with the future of Intu’s assets likely to be more akin to vultures picking over its carcass.”