Intu Properties Share Discussion Threads

[zcaprd7] 07/6/2020 15:59

That, as you know, is not the definition of insolvency lol...

[hpcg] 07/6/2020 15:58

The key dates are 26th June, which is when the waivers on the bank facilities expires, and the 1st July, which is when covenants on all the individual mortgages and SPVs have to pass their half yearly tests. Not all those covenants will fail, but for those that do the lenders have recourse.

It is very difficult to predict events because it looks like no one can see a way through. One of the complexities I imagine, is the number of parties involved. It isn't like a conventional corporate debt structure where all the players are trying to maximise their piece of the total pie.

[zcaprd7] 07/6/2020 15:58

That is the gamble really, how intent are the banks on taking over a load of shopping centres, as opposed to letting the current muppets carry on (trying to) collect the rents?The KPMG thing certainly ups the ante... I think they are playing a three way poker game with the banks and the government?

[smithers125] 07/6/2020 12:36

It seems that way.

I don’t know if the holding company will make it to the 15th June.

And even if they do, the 26th June seems to be a key date for the company.

[bob1995] 07/6/2020 12:32

Looking like Monday could be a down day.

[smithers125] 07/6/2020 12:30

What sort of timescale do you put on the (potential) administration of the holding company?

[hpcg] 07/6/2020 11:24

2theduke - the debt tranches have their own covenants. These are independent of the corporate covenants and each other. The SPVs have covenants, the individual property mortgages have covenants. Only the revolver is held at the corporate level, all the other debt is secured on properties. Like any mortgage once the terms of the mortgage are breeched the lender has the right to foreclose.

[hpcg] 07/6/2020 11:18

libertine - the company is the dictionary definition of insolvent, it does not have enough money to pay back the debt it owes. It is short of over £1 billion in that regard:




LEI: 213800JSNTERD5CJZO95

INTU PROPERTIES PLC

4 MARCH 2020



Update on strategy to fix the balance sheet

As previously announced, intu properties plc ('intu', the 'Company' or the 'Group') has been reviewing a range of options to fix its balance sheet and establish a more appropriate long-term capital structure.

intu has, over the past several months, engaged in extensive discussions with its shareholders and potential new investors regarding a possible equity raise of between
£1 billion and £1.5 billion. Following these discussions intu has concluded it is unable to proceed with an equity raise at this point.

[libertine] 07/6/2020 11:00

I don`t see that it is in the interest of anyone to put this company into administration, at this time and in the present circumstances. The company is not insolvent, and I think government assistance, if needed, is not out of the question.

[smithers125] 07/6/2020 09:59

Morning all,

I currently hold 85000 shares in INTU and I am currently torn on selling or “holding on for the ride” as someone else put it earlier on this thread...

Do we think that INTU placing KPMG on standby will give investors comfort or have them running for the hills?

The “non essential” businesses reopen in the UK On the 15th June and my original plan was to hold on to my shares until then, expecting a spike, but I am now concerned that they are going to crash back down to their 52 week low of 3-4p/share (I purchased at 9p/share).

I would be very grateful to read people’s thoughts prior to making my decision in the morning.

CS

[2theduke] 07/6/2020 06:50

Why do you think the SPV bond holders have a right of enforcement for waivers at the corporate level? They should be bankruptcy remote with standby service providers and be covenant lite by definition.
It seems a no brainer to me to wave covenants on LTV and even debt service cover to await better occupation rates. Core here is how to do protect yourself valuation if you take control now.

[mwainw1973] 06/6/2020 19:30

So does that mean shares go up or down lol

[hpcg] 06/6/2020 19:00

Here's why the end of June is the denouement. In the overall corporate structure the banks are senior, in the individual special purpose vehicles the bonds that have specific locations as security are senior. The latter cannot afford to be diluted by the corporate level debt, and once the covenants fail it take literally one bondholder to call in their security and the house of cards collapses.

My estimation of the best course forward is a pre-pack similar to US Chapter 11. Existing management continues, but there is creditor protection. SVP bond holders divvy up and nothing for equity and little for unsecured. Most likely the Metro Centre bondholders will act; S&P estimate Loan To Value of 84% and with the bonds redeeming in 2028 they'll be underwater in that time. Also in the downgrade that because of a previous LTV breech cash is already trapped in the vehicle. I honestly can't see how the managers of those bonds cannot foreclose, it is their fiduciary duty, and they in turn may face legal action if they don't act. This is a prime property and it redeems after the Debentures



The Debenture SVP has mortgage security on Eldon Square, The Potteries, a cinema and entertainment complex in Glasgow (riddled with failed Restaurant Group facias), and a city centre property in Nottingham that isn't the Victoria Centre. I also think this group might want to take on their properties. For a start there is a conflict of interest between Intu properties in Nottingham and Newcastle-Upon-Tyne, the latter especially. These are non-prime, and might fancy their luck as a piece of the bigger pie.

Trafford Centre is possibly a bit different because of its history, but it is also a prime property and while it has a redemption in 2024 the largest tranches are 2038. If I own those I have basically nothing to lose by foreclosing; I'd be mad not to in fact.

To be clear, once debtors on Metro and Trafford repossess they share nothing with the banks. They are going to take a hair cut anyway. The banks, which get first dibs at foreclosing, would have their debt spread across a less attractive portfolio.

There is a wall of secured debt in 2021 across multiple centres (2019 annual report page 166) all of who would love to get their cash back. Cash that the company doesn't have, and won't have. There is not a chance in hell these holders will waive past their payment date, not a single chance. Merry Hill security, 2024 redemption, LTV about to breach, interest cover pretty handy. I'll be having that back right away thanks very much.

It is just game theory. One can argue to the hills that 'its complicated', but there are too many people for whom getting their security is the right thing for them to do. Talks will all be about whether pre-pack details can be concluded on an equitable basis IMO.

[zcaprd7] 06/6/2020 17:30

People close to the company believe its lending syndicate is likely to demur from forcing it into insolvency because of the potential value destruction that would occur.Securing alternative managers of large shopping centres as the retail sector attempts to recover from COVID-19 would be an uncertain process, according to insiders.

[hpcg] 05/6/2020 17:33

Victoria's Secret has gone belly up in the UK. Another tenant gone. Write those arrears off. Big overlap between Intu and VS - they were definitely in all the big centres.

[ericshunn] 05/6/2020 14:32

Cant see how the debt covenants for both ltv and income cover wont be breached at 30 June. Fairly sure the mechanism was to trap all cash within these. Intu simply wont have any cash. This should not be a difficult business to manage as there are only about a dozen assets and the bulk of the income concentrated in about 20 tenants.

[zcaprd7] 05/6/2020 13:28

Just pinging this to stay ahead of the Gregbot... Can't decide whether to offload this before the covenant deadline, or hold on for the ride?

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[ericshunn] 03/6/2020 18:57

It was with much mirth I read through Intus cashflow projections for H2 20 and 21. The cash NRI for the centres or security groups are fantastical. If management can achieve anywhere near those levels then I doff my cap. The only way they could possibly achieve those numbers is with 100% rent collection, every outstanding rent review achieving a rental uplift and occupancy getting to 100%. Given the well proven inability of management to deliver on anything I dont think that will happen. Equity is kaputted.

[zcaprd7] 03/6/2020 15:05

I'd take 10p, a lot of nervous shorters out there...

[easwarareddy] 03/6/2020 14:33

15p before close? ...

[easwarareddy] 03/6/2020 14:32

Intu picking up again now

[nasnas1] 03/6/2020 14:27

The best place to put your profits is HMSO it's heading back to 225p where it was two months ago!! Take a look guys.