Lakeside owner Intu folds under debt but to keep malls open

By Yadarisa Shabong

(Reuters) - Intu Properties <INTUP.L> called in administrators on Friday after failing to secure a deal with creditors, but said all its malls, including Manchester's Trafford Centre, will remain open.

KPMG said it had appointed administrators to the British firm, which was last year struggling with net debt of some 4.69 billion pounds, before the coronavirus lockdown hit rent payments, piling pressure on its finances.

Jim Tucker, a KPMG partner appointed as one of three joint administrators to Intu, said owning Britain's biggest and best-known shopping centres was not enough to insulate it from the trading conditions which had hit British retailers.

"Those challenges have fed through to owners of retail property, even to owners of high-quality shopping centres such as Intu's," Tucker said in a statement.

Intu, which owns 17 major shopping centres including Lakeside in Essex, out-of-town Merry Hill centre in central England and the MetroCentre in the north east, also has a shopping centre and development site in Spain.

Its shopping centres are home to hundreds of well-known retailers and normally get millions of visitors a year. But the coronavirus crisis hit both footfall and rents.

Intu's London-listed shares had collapsed nearly 70% to a record low of 1.2 pence, valuing it at around 16 million pounds, from a peak of 13 billion pounds in 2006. Its shares in London and Johannesburg were suspended on Friday.

Intu, which has around 2,600 staff, began talks with creditors in May but could not reach an agreement on the duration of a debt standstill, how much creditors would share in any future recovery and funding.

The administrators said they would work with staff, suppliers and other stakeholders to preserve value and jobs.

A debt waiver Intu secured in early May expired on Friday, triggering a breach.

Two years ago, Intu's largest shareholder John Whittaker's Peel Group made a 2.9 billion pound approach and rival mall operator Hammerson <HMSO.L> later offered 3.4 billion pounds.

"The fact several suitors took a look at the business in the last couple of years before walking away should have set alarm bells ringing," AJ Bell analyst Russ Mould said.

"The chances of a white knight riding to the rescue are practically non-existent at this point."

(Reporting by Yadarisa Shabong in Bengaluru and Paul Sandle in London; Editing by Anil D'Silva, Uttaresh.V, David Evans and Alexander Smith)