Intu puts KPMG on stand-by for administration if bank talks fail

Crisis-hit shopping centre owner Intu Properties has lined up KPMG to handle a potential administration if efforts to gain breathing space from its lenders fail.

The contingency plans from the owner of Essex’s Lakeside and Manchester’s Trafford Centre, first reported by Sky News, come ahead of critical talks over its £4.5bn debt pile.

Intu’s bank lenders have already agreed a waiver of covenant tests on its debts, which expires on June 26.  Chief executive Matthew Roberts is seeking a wider 18-month standstill to repair the firm’s balance sheet and avoid triggering a raft of repayments to banks and bondholders which would almost certainly tip Intu over the edge.

The firm, which has 17 UK centres and 2000 staff, was already struggling from structural shifts towards online shopping before the Covid-19 outbreak and resultant closure of non-essential shops devastated rental income.

The value of its shopping centres has also slumped, forcing a £2bn loss in 2019 and heaping more pressure on its finances. In May the firm said it had collected just 40pc of rents due from tenants and a further shortfall looks certain at the next ‘quarter day’ for payments on June 24.

Intu set out financial forecasts last week in a bid to convince lenders to offer leeway on its borrowings. The firm set out a predicted £181m slump in rental income but said it would have £24.1m in cash at the end of the year, rising to £62.6m at the end of 2021.

Shareholders have borne the brunt of the pain so far as Intu’s share price has collapsed more than 90pc in the last year, prompting its relegation from the mid-tier FTSE 250 index and leaving the company with an equity value of just £125m.

Just two years ago rival retail property firm Hammerson launched a £3.4bn bid for the company before being forced into an embarrassing U-turn by nervous investors. In November 2018 a consortium led by major Intu shareholder John Whittaker - founder of property investor Peel Group - also aabandoned a £2.9bn attempt to take the company private. Intu and KPMG declined to comment.