What went wrong at intu?
These facilities have significant covenant headroom. For example, a further fall of 10 per cent in capital values would create a covenant shortfall of only £1 million.
- A further fall of 10% in property values would result in covenant breaches costing £174m to resolve, including repayment of the £161m drawn balance on the revolving credit facility.
- A further decline of 10% in rental income would cost an additional £34m in debt service covenant breaches.
- £331.5m of repayments would fall due on 31 March 2021 and £1,116.7m on 31 December 2021, including £573.2m outstanding under the revolving credit facility
- Early termination of swaps could cost another £93m
- “alternative capital structures”, probably involving some kind of debt/equity conversion, and possibly a rights issue
- fire sales of assets
- persuading lenders to waive or amend the covenants (the note says this would have to be done before the next covenant test, due in July 2020)
- “other self-help measures”, including a lower level of capital expenditure “in the short term”. This seems to be very much a last resort, probably because capital projects can be very costly to defer.
Discussions have been ongoing with financial stakeholders to achieving standstill-based agreements. However, insufficient alignment and agreement in relation to the terms of such standstill-based agreements has been achieved with financial stakeholders ahead of the above deadline.
The sad story of Maplin Electronics
Source: http://www.coppolacomment.com/2020/07/what-went-wrong-at-intu.html
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