Metrocentre and Eldon Square owner makes national closure warning

Metrocentre owner Intu Properties has warned that its shopping malls across the UK may have to close if it calls in administrators as it remains locked in crunch talks with lenders.

The group, which also owns Eldon Square in Newcastle, confirmed in an announcement to the London Stock Exchange that it has put KPMG on stand-by and is negotiating details with lenders as it looks to secure vital breathing space ahead of a deadline on Friday.

Intu is hoping to arrange a so-called standstill agreement on terms of up to 18 months, but said that at this stage it is unlikely to be more than 15 months.

It warned that if it cannot reach an agreement and is placed in administration, without critical upfront funding from its lenders "there is a risk that centres may have to close for a period".

It emerged earlier this month that KPMG had been appointed to make contingency plans for Intu's administration.

Intu is thrashing out details of a possible agreement with lenders before June 26, when covenant tests are due on its lending deals.

Given the impact of the coronavirus crisis on shopping centres, which were forced to close for nearly three months amid the lockdown, the business is likely to fail these covenant tests.

It is also due for updated valuations of its shopping centres this month, which could see it breach lending agreements, given woes in the sector.

Intu said talks are focusing on the length of a possible standstill, how much creditors could share in any future upside in shopping centre valuations, as well as changes to how shopping centres are funded to allow them to pay for staff, such as security and health and safety.

It said:

If this cannot be secured, then malls may be forced to shut, it warned.

Intu said: