Intu Properties PLC (LON:INTU) said it is looking to agree “standstill arrangements” with the creditors of its assets to give it time to see how the retail property market recovers from the coronavirus crisis.
Under the standstill arrangements, the shopping centre owner will seek relief until at least the end of 2021 from testing of its lending covenants, debt amortisation and final payments for any lending facilities coming to maturity.
Earlier this month the owner of the Trafford Centre and Lakeside shopping centres agreed covenant waivers on its revolving credit facility until 26 June 2020 and now said it was extending its negotiations to the asset level as it explores "all options", though stressing there was no certainty that any standstill could be achieved with all or some of its creditors.
While these negotiations are taking place, Intu acknowledged that it is likely to breach covenants at the end of June due to unpaid rent and valuation declines and this will be "addressed as part of the wider discussions".
Interest would be on the basis of “pay if we can”, with the majority of its shopping units remain closed.
In March the group revealed how badly footfall and rents were slumping due to the coronavirus lockdown, with just 29% of its expected rent received for the second quarter, which had increased to 40% by the start of May.
Analysts at broker Peel Hunt said: "Whilst the banks may well agree to such terms, partly in order to be seen helping companies through the Covid-19 crisis, we believe they might push for a shorter standstill agreement.
"There is also no guarantee that bondholders, some of whom are reportedly distressed debt hedge funds, will agree."
With Intu’s long-dated traded debt now yielding over 14%, higher than at any point during the global financial crisis, Liberum's number-crunchers said: "Despite today’s update, we continue to believe the company does not survive without government help. Our 2p target price reflects the nominal value of a vote."
Intu shares, having fallen 95% over the past 12 months, were struggling to make headway at 4.34p on Monday morning.
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