Shopping centre owner Intu Properties (INTU) said it was preparing for administration should talks with key stakeholders on a debt standstill fall through. It shares fell 60% to 1.6p capping a rapid fall from grace since its relegation from the ranks of the FTSE 100 back in 2017.

The intervening period has taken in two failed takeovers – rival Hammerson (HMSO) and a consortium led by investment firm Brookfield both walking away from proposed deals in 2018.

BROKEN BY DEBT

A combination of a £4.69 billion net debt pile at the last count, the structural shift to online shopping and lockdown has led the business to this sorry state.

Intu said it was still in talks with stakeholders over a debt standstill ahead of the revolving credit facility covenant waiver deadline of midnight tonight. But the company added that it had appointed KPMG to 'contingency plan for administration.'

'In the event that Intu properties is unable to reach a standstill, it is likely it and certain other central entities will fall into administration,' it added.

AJ Bell investment director Russ Mould said: ‘Some of the factors which have led the company to this point have been out of its control, but others have been of its own making.

‘A shift to online shopping has hit rental income and valuations at its out-of-town shopping malls and Covid-19 has clearly had a devastating impact.

POORLY TIMED EXPANSION

‘However, the business took on too much debt and in hindsight was buying up assets at the wrong time in the early to mid-2010s. 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.

‘The chances of a white knight riding to the rescue are practically non-existent at this point, with the future of Intu’s assets likely to be more akin to vultures picking over its carcass.’

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Issue Date: 26 Jun 2020