Shopping centre owner Intu has warned that it is at risk of defaulting on June debt covenants unless it can secure standstill agreements from its lenders.
The landlord, which owns Manchester’s Trafford Centre and Lakeside in Essex, has announced it is likely to breach its debt commitments on 26 June as a result of the ongoing coronavirus crisis.
With non-essential stores remaining closed until 1 June, Intu has announced that “the resulting impact on rental collections and valuations at the end of June is likely to result in breaches of covenants.”
Intu was struggling before the crisis, and reported a £2bn loss for the year to 31 December 2019.
However, is now seeking standstill agreements under which its lenders would agree not to take action to collect the debts owed in respect of its revolving credit facility.
Intu has proposed that the agreements would ”seek relief from financial covenant testing, debt amortisation and facility maturity payments for a period through to no later than 31 December 2021”, adding, “When market dislocation has passed, there will be greater opportunity to explore alternative capital structures and solutions and disposals to ultimately fix the balance sheet.”
However, the business has warned that there is no certainty in agreeing such terms, and that earlier individual breaches may mature over the coming weeks