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Intu gets waivers on debts until June 26
1st May 2020 08:02
(Sharecast News) - Troubled shopping centre owner Intu said it had agreed debt waivers with its lenders until June 26 as it warned it would take legal action against "well capitalised" tenants who were refusing to pay rent.
The company on Friday said it had appointed former PwC and EY turnaround specialist David Hargrave as its chief restructuring officer as it looked for a way out of the coronavirus crisis that has forced non-essential retailers to close their doors.
Reports this week said bondholders were preparing to take control of shopping centres against which their debt is secured if the company defaulted. Intu was at risk of breaching covenants on debt held against the assets as plunging shopping centre valuations hit loan-to-value ratios.
Clifford Chance, the law firm, and Moelis & Company, an investment bank, had been appointed to advise bondholders of ?1.3bn of debt secured against Intu's centres at Lakeside in Essex, Braehead, in Glasgow, Watford, in Hertfordshire, and the Victoria Centre in Nottingham, according to property website React News.
Intu said it had furloughed around 80% of its staff and cut 20% of boardroom pay. It added that only 40% of rent and service charges had been paid for the quarter so far and was now offering customers the option to pay rent on a monthly basis and was in "advanced" talks with customers representing around 28% of the outstanding amounts.
The company in March revealed it was in trouble even before the Covid-19 lockdown as it grappled with a net debt burden of ?4.69bn and losses of more than ?2bn.
"We believe that these actions are another step forward that will allow us to extend our engagement to key stakeholders of the group at the asset level as we explore all options, including potentially seeking standstills to overcome the current market dislocations. This forms part of our ultimate strategic objective to fix the balance sheet over the medium term," Intu said on Friday.
"There are a very small number of cases where customers are not currently engaging with us to find a consensual solution - these are large, well-capitalised brands who have the ability to pay but have chosen not to. In these instances we are prepared to take more robust action to enforce the legally binding terms of those leases."
The company on Friday said it had appointed former PwC and EY turnaround specialist David Hargrave as its chief restructuring officer as it looked for a way out of the coronavirus crisis that has forced non-essential retailers to close their doors.
Reports this week said bondholders were preparing to take control of shopping centres against which their debt is secured if the company defaulted. Intu was at risk of breaching covenants on debt held against the assets as plunging shopping centre valuations hit loan-to-value ratios.
Clifford Chance, the law firm, and Moelis & Company, an investment bank, had been appointed to advise bondholders of ?1.3bn of debt secured against Intu's centres at Lakeside in Essex, Braehead, in Glasgow, Watford, in Hertfordshire, and the Victoria Centre in Nottingham, according to property website React News.
Intu said it had furloughed around 80% of its staff and cut 20% of boardroom pay. It added that only 40% of rent and service charges had been paid for the quarter so far and was now offering customers the option to pay rent on a monthly basis and was in "advanced" talks with customers representing around 28% of the outstanding amounts.
The company in March revealed it was in trouble even before the Covid-19 lockdown as it grappled with a net debt burden of ?4.69bn and losses of more than ?2bn.
"We believe that these actions are another step forward that will allow us to extend our engagement to key stakeholders of the group at the asset level as we explore all options, including potentially seeking standstills to overcome the current market dislocations. This forms part of our ultimate strategic objective to fix the balance sheet over the medium term," Intu said on Friday.
"There are a very small number of cases where customers are not currently engaging with us to find a consensual solution - these are large, well-capitalised brands who have the ability to pay but have chosen not to. In these instances we are prepared to take more robust action to enforce the legally binding terms of those leases."