Trafford Centre owners ‘likely’ to go into administration

The owners of the Trafford Centre, Intu, have announced they are ‘likely’ to go into administration after talks about the future of the company have failed. 

The company made headlines this week due to its struggles with £5bn debt, with the future of the company up in the air.

Earlier this week the Intu confirmed they had put KPMG on standby as administrator, and was reported to be negotiating deals with lenders.

The company has now issued a new statement saying that these talks look to have been unsuccessful. 

Intu says it is likely to make a further announcement ‘as soon as possible’, with a key agreement with creditors expiring on Friday at 11:59pm, the Manchester Evening News reports.

This uncertain future could lead the Trafford Centre to temporarily close. The company warned if it went into administration ‘there is a risk that centres may have to close for a period’.

In a statement, the company said: “On 23 June 2020, Intu Properties plc (“Intu”) provided an update on discussions with key stakeholders to progress its standstill strategy ahead of the revolving credit facility covenant waiver expiry at 11:59 p.m. this evening, 26 June 2020.

“Since that update, discussions have continued with the Intu Group’s creditors in relation to the terms of standstill-based agreements.

“Unfortunately, insufficient alignment and agreement has been achieved on such terms. The Board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders.

“This is likely to involve the appointment of administrators. A further announcement will be made as soon as possible.”

Intu – which was already under financial pressure – has struggled in the coronavirus pandemic. In May, they threatened ‘robust action’ against large tenant businesses who haven’t paid rent throughout the lockdown.

The company says that for the first quarter of the year, the company only received 40% of rent and services charges which were due by the end of March 2020.

Intu Properties own nine of the country’s top 20 shopping centres and has been struggling for some time due to a shrinking high street market. 

In 2018, the company made a £1.2bn loss due to the collapse of several big name retailers, along with many others pushing for insolvency plans to reduce rents known as company voluntary agreements.

On Tuesday this week, as Intu announced that KPMG was working on a ‘contingency plan’ for administration, it said: “Further announcements will be made as appropriate.

“Notwithstanding the progress made with lenders, Intu has also appointed KPMG to contingency plan for administration. In the event that Intu Properties plc is unable to reach a standstill, it is likely it and certain other central entities 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. If the administrator is not pre-funded then there is a risk that centres may have to close for a period.”