Coronavirus: Metrocentre bondholders brace for restructuring battle
Lenders to Intu Metrocentre are to appoint advisers for talks over its future financial structure, Sky News learns.
Tuesday 19 May 2020 14:59, UK
Lenders to one of Britain's biggest shopping centres are squaring up for a battle with its owners about a financial restructuring given added urgency by the retail industry鈥檚 coronavirus maelstrom.
Sky News understands that bondholders in Intu Metrocentre Ltd - the direct owner of a retail and leisure complex near Newcastle which draws 20 million visitors every year - are this week planning to appoint advisers to negotiate over its future.
The bondholder group is led by M&G Investments, the asset manager spun out of Prudential several months ago.
Lenders to Metrocentre are preparing to engage with Intu over an asset that was last valued at £677m, but which has almost £500m in outstanding debt attached to it.
The Gateshead site is Europe's largest covered shopping and leisure centre.
This negotiation process is being replicated across many of Intu Properties' flagship malls, which also include Lakeside in Essex and Manchester's Trafford Centre.
Those assets are all held in individual subsidiaries beneath the parent company, which has seen its financial position rendered parlous by the COVID-19 pandemic.
In March, Intu said it had received less than 30% of the rent it was owed by shopping centre tenants following the imposition of the UK-wide lockdown.
It has since managed to secure some breathing space from creditors, but this week said it wanted a formal 'standstill' agreement in place with its lenders, potentially until the end of next year.
"This market backdrop, where the investment market is effectively closed, also creates material uncertainty for any asset disposal or additional funding process which Intu might pursue to address these covenant issues.
"Intu believes that in order to provide a stable environment in which to address this situation, standstill-based agreements with relevant financial stakeholders across its structures, at both the asset and the group level, are the best course of action and its primary focus to maximise value."
The shopping centre group is one of the London stock market's worst performers, with its shares down over 95% during the last year.
Its equity is now valued at just over £50m, while it has debts of well over £4bn.
The company is an important player in some of the UK's largest regional economies, employing 2,300 people directly - but a further 102,000 people working in its 17 UK shopping centres.
Another 30,000 work in Intu's broader supply chain.
Intu declined to comment.