A large JSE-listed mall owner just collapsed - under a R80 billion debt burden
- Long a favourite of South African investors who want offshore exposure, the UK mall owner Intu has collapsed.
- The company had a massive debt burden, and has suffered large losses amid the shift to online retail, Brexit uncertainty and now the Covid-19 crisis.
- KPMG has been appointed as its administrator.
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The UK mall owner Intu – long a favourite of South African investors wanting offshore exposure – on Friday suspended its listings on the JSE and in London, as it collapsed into administration.
The company owns 17 of the largest shopping centres in the UK and a couple of Spanish malls.
Its share price was trading above R70 four years ago - it was suspended at 29c on Friday.
Intu was dragged into a death spiral by a massive debt burden of £4.5 billion debt (R78 billion), as its rental income also came under pressure over uncertainty over Brexit, the strong shift to online shopping and the closure of large chains like New Look, Toys R Us, House of Fraser, Debenhams and HMV, which used to have stores in its UK malls. It made a loss of £2.2bn (R47 billion) last year .
Covid-19 dealt the final death knell. The lockdown in the UK shut shops and starved the malls of income.
Intu defaulted on its debt repayments last month and has been in negotiations with creditors to get a debt holiday of more than a year. But talks failed, and the company appointed KPMG as its administrator. Its listing was suspended on the JSE and in London.
For many years, Intu was a popular holding among South African investors as it gave them exposure to a UK-traded company, which earned its profits in pound. This gave locals some protection against a constantly weakening rand.
Over the years, large South African investors including Coronation, the Public Investment Corporation (which manages civil servant pensions), Sanlam Investment Management and Investec were big stakeholders in Intu – although many have cut their losses in recent months.
Intu had its roots in 1980 as Liberty International, which was founded by the South African entrepreneur Donald Gordon, who started Liberty Life in 1957. Following various deals and name changes, the company was merged with the UK shopping centre developer Capital & Counties in 1992. It was later demerged and renamed Capital Shopping Centres, before assuming the name Intu in 2013.
Intu owns some of the biggest malls in the UK, including the Trafford Centre in Manchester, which attracts more than 30 million visitors a year. It also owns the large MetroCentre in Newcastle and the Lakeside mall in Essex.
For now, all its shopping centres will continue to trade, but the company earlier warned that some malls may end up closed during the administration.
Compiled by Helena Wasserman
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