Intu Properties PLC (LON:INTU) has appointed KPMG to contingency plan for administration in case it does not agree ‘standstill’ arrangements with its creditors.
The troubled owner of shopping centres announced last month it was seeking relief until at least the end of 2021 from testing of its lending covenants, debt amortisation and final payments for any lending facilities coming to maturity.
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The firm is still discussing with stakeholders ahead of the revolving credit facility covenant waiver deadline on Friday.
The three main points are the duration of the standstill, expected to last no more than 15 months, the extent and basis to which creditors will share in any future valuation recovery and how the operations of individual centres are to be funded.
Intu stressed there is no certainty on reaching an agreement, so if the standstill does not go through it is likely it will fall into administration.
In this situation, all property companies would be required to pre-fund the administrator to provide central services to the shopping centres, otherwise if the administrator is not pre-funded some centres may have to close for a period.
“Whilst this announcement may be an attempt from Intu to assert pressure and publicity on the bondholders, we still struggle to see any value in the equity,” Peel Hunt commented.
Shares dropped 4% to 4.43p on Tuesday morning.