2 Years On, Losses For Intu Creditors Could Top £4.5B
Next month marks two years since shopping centre REIT Intu fell into administration. The process of realising its assets trundles on, and the losses that the company’s creditors stand to incur mean Intu will become one of the biggest corporate collapses in UK history.
Losses for creditors could top £4.5B, a Bisnow analysis of progress reports from the administrators now managing Intu showed. Some assets have been sold and some loans have been restructured, but the level of debt built up by the company combined with the sharp fall in the value of its shopping centre assets means that creditors face losing billions of pounds.
Creditors of two Intu subsidiaries stand to be hit with the biggest losses, progress reports from KPMG showed. Lenders to Intu Properties are owed around £1.5B, but they are only likely to see £100M returned to them, or 7p on the pound. That includes lenders that provided a £581M revolving credit facility to the company and those that guaranteed £377M of convertible bonds.
The figure recouped could increase depending on whether those revolving credit facility lenders can sell the Arndale Centre in Manchester or Cribbs Causeway in Bristol.
The creditors of another subsidiary, Liberty International Group Treasury, are owed £2.9B, but they are likely to receive just £72M, or 2p on the pound.
In total, creditors owed about £4.7B are likely to receive just £255M, the progress reports showed. Again, that figure could rise if Intu’s share of the Xanadu shopping centre in Madrid were to be sold.
Some lenders to Intu have taken over the company’s assets, and are now trying to manage them to improve their value. But the continued tough retail environment makes this hard going in many instances.
This week Cale Street, which took over the ownership of Intu’s shopping centre in Derby, agreed a loan default waiver extension with bondholders that own the debt to the centre. In exchange for about £11M of repayments on a £143M loan, interest cover and loan-to-value covenant defaults will be waived until April 2023.