£10 million Merry Hill revamp continues despite owners being in crisis talks
Work on the £10 million programme to modernise the giant Merry Hill shopping centre is continuing despite its owners being in crisis talks with lenders over growing debts.
It is feared that intu Properties, which owns many of the UK's biggest shopping centres, could go into administration later this month.
Debt-hit intu Properties put accountants KPMG on standby to handle a potential insolvency process head of talks over its debts with banks that have already agreed a waiver of covenant tests, which expires on June 26.
It is seen as a contingency plan in case lenders do not give the Brierley Hill shops complex's owner breathing space to pay back debts that are reported to have grown to £4.5 billion.
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Intu, which has declined to comment on the reports, operates 17 shopping centres across the UK including Lakeside in Essex and Manchester's Trafford Centre.
A merger with the bigger Hammerson shopping centres business fell apart two years ago in the wake of a series of closures of national retail chains.
Intu has appointed KPMG to help prepare for the eventuality of administration if chief executive Matthew Roberts cannot achieve a standstill agreement of up to 18 months to give it the space to fix the firm’s balance sheet as market conditions normalise and avoid repayments to banks and bondholders which could tip intu Properties, which has 2,000 staff, over the edge.
It will know if an agreement can be reached within the next couple of weeks.
Intu has yet to issue any announcement on the move to the stock exchange.
In the meantime centres, including Merry Hill, will be operating as usual with many of the non-essential shops preparing for reopening on June 15.
Before the coronavirus crisis hit, intu was already struggling from shifts towards online shopping and the closure of non-essential shops hit rental income.
Rent income was down to just 40 per cent for the last quarter.
Intu's shopping centre footfall had been better than the industry average in the first eight to 10 weeks of 2020 and the company was successfully recruiting new tenants for units in its centres.
Merry Hill is currently in the midst of the programme to modernise the facade, reconfigure the entrance layouts and install energy-saving LED feature lighting and large media screens. The modernisation programme is due to be completed in the third quarter of 2020.
A range of additional safety measures have been implemented inside the centre, which has only been partially open during the crisis, to ensure social distancing.
Shoppers are asked to follow a marked route and to keep two metres apart at all times. Hand sanitisation stands have also been placed at key points throughout the centre.
Only the entrances by the bus station and Marks & Spencer and Argos are currently open.
Intu's shares stood at 9.26p at the close of trading on Friday and had fallen to 7.25p by lunchtime yesterday. They are up from an all-time low of 3.21p in March but are down 95 per cent over the last five years.
