Intu appoints chief restructuring officer as Covid-19 crisis grows

Shopping centre owner Intu has appointed David Hargrave as chief restructuring officer to help the company through the Covid-19 pandemic.

Hargrave has 20 years of experience as a partner in the restructuring practices of both PwC and EY, specialising in business turnarounds across many sectors, and his role as chief restructuring officer at Intu is to assist the shopping centre owner “work through its strategy to fix the balance sheet”.

This appointment comes as Intu shared an update on market conditions stating that since its Covid-19 update on March 26 it has only received 40 percent of the rent and service charge for the quarter and it is looking to take “robust action” to enforce the terms of its leases to collection outstanding rent.

In a statement, Intu said that it was now offering monthly rents to the end of 2020 and that it was in “advanced discussion” with customers representing a further 28 percent of the rent due, with the remainder of customers are at various stages of discussions regarding revised payment plans.

However, it did accuse some retailers of not engaging to find a “consensual solution” amid the coronavirus crisis, adding that these were “large, well-capitalised brands who have the ability to pay but have chosen not to”. In these instances, Intu said it was prepared to take “more robust action to enforce the legally binding terms of those leases”.

Intu preparing to take “robust action” to collect outstanding rent

Currently, Intu centres are operating on a “semi-closed basis” explained management, with only essential stores remaining open. This has led the company to furlough 60 percent of staff in the centres and around 20 percent at its head office.

In addition, the Board have agreed to a 20 percent salary reduction for the next three months and the business has also identified around 3 million pounds of cost savings in the short-term as it looks to support its retailers by reduce service charge costs.

Intu also confirmed that it has agreed waivers on its revolving credit facility until June 26, 2020, as well as reaching an agreement on interest rate swaps which had a mandatory break at the end of April. The amounts due on the close of these swaps is now to be paid on the June 26, 2020, or a later date if agreed.

On the waivers, Intu explained: “We believe that these actions are another step forward that will allow us to extend our engagement to key stakeholders of the group at the asset level as we explore all options, including potentially seeking standstills to overcome the current market dislocations. This forms part of our ultimate strategic objective to fix the balance sheet over the medium term.”

Image: courtesy of Intu