UK retail property giant Intu on Friday said talks with its lenders had failed to reach an agreement to save it from falling into administration.
The shopping centre owner, which also runs Lakeside in Essex, had previously warned that its centres across the UK may have to close if it calls in administrators.
As a result of the impact of the COVID-19 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.
Intu employs about 3,000 staff across the UK, while a further 102,000 work for the shops within its shopping centres.
In a statement released today, Intu said: “Discussions have continued with the intu Group’s creditors in relation to the terms of standstill-based agreements. Unfortunately, insufficient alignment and agreement has been achieved on such terms.
“The Board is therefore considering the position of intu with a view to protecting the interests of its stakeholders. This is likely to involve the appointment of administrators. A further announcement will be made as soon as possible.”
Intu was hoping to arrange a so-called standstill agreement on terms of up to 18 months, but had previously assumed it is unlikely to be more than 15 months.
It is also due for updated valuations of its shopping centres this month, which could lead to it breach lending agreements.
It emerged earlier this month that KPMG had been appointed to make contingency plans for intu’s administration.
The retail landlord said the crisis heavily impacted its ability to secure rent payments in March, with some retailers choosing not to pay rents.
Some retailers have also collapsed into administration or confirmed that they will permanently shut stores in the aftermath of the crisis.
Intu was already under financial pressure as it came into the coronavirus pandemic, selling properties in the UK and Spain in recent years to help prop up its finances.