(Alliance News) - Intu Properties PLC on Tuesday reported progress in its discussions with lenders to secure a standstill on its vast debt obligations, but still took the dramatic step of appointing accountants KPMG to make a contingency plan for administration.
The Johannesburg and London-listed company explained that, in the event that it is unable to reach a standstill, it is likely that it and some other 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, Intu noted. If the administrator is not pre-funded then there is a risk that centres may have to close for a period.
Turning back to standstill-based agreements, the real estate investment trust said it had made progress in talks with its lenders ahead of the revolving credit facility covenant waiver deadline of Friday.
Intu has requested an 18-month standstill that would grant it relief from covenant tests and payments on debt facility maturities.
In early March, Intu was unable to launch a fundraise amid uncertainty in "equity markets and retail property investment markets", heaping pressure on the firm.
On Tuesday, Intu clarified that, in order to agree the standstill, it has to discuss the duration of the standstill, as some stakeholders want a duration of less than 18 months. The extent and basis to which creditors at the individual asset level will share in any future valuation recovery also has to be determined, the company noted.
Intu said it is negotiating how the operations of individual shopping centres are to be funded. Some centres have reduced rent collections as a result of Covid-19 and have cash trapped under their financing arrangements, the company explained.
"This all remains subject to further negotiations, with no certainty as to whether Intu will achieve a standstill, or on what terms or for what duration," the company said in its statement Tuesday.
Intu shares were trading 0.2% lower in London on Tuesday at 4.60 pence each, while in Johannesburg, the stock was down 5.2% at ZAR1.09 a share.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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