THE owner of Intu Metrocentre has collapsed into administration following a failure to secure a last minute agreement with its lenders.

The biggest shopping centre in the North-East and home to more than 200 restaurants and retailers is among 17 across the UK affected.

Intu Properties, which also partly owns Intu Eldon Square in Newcastle, called in administrators this afternoon.

But what will happen to Intu Metrocentre and will it remain open? We've put together everything we know so far.

The Northern Echo:

What's happened?

Intu, which owns Intu Metrocentre, called in the administrators KPMG on Friday afternoon.

It had hoped to arrange a so-called standstill agreement on its financial agreements, but talks failed and it collapsed on Friday afternoon.

The group had struggled under a £4.5 billion debt burden for the past year, but has been hammered by significantly lower rent payments from retail tenants since the coronavirus outbreak.

Intu had previously warned that without upfront funding from KPMG, shopping centres would likely close.

Will Intu Metrocentre stay open?

Yesterday, a spokesperson for Intu told The Northern Echo that centres may have to close if they do not provide up front funding to administrators.

It is this funding that will pay for 'central services' including front line centre staff and back office support like IT. 

A spokesperson said: "As intu announced earlier this week, in the event of an administration, centres would need to provide up front funding to KPMG to cover the cost of continuing to provide central services like front line centre staff and back office support like IT.

"If a centre is unable to pay for these services to continue, it may have to close temporarily. There has been no indication as to which, if any, centres that would apply to."

But it will remain trading...for now

It has not yet been confirmed which shopping centres have or are expected to enter agreements with the administrators.

But for now, Intu has confirmed all of its shopping centres will remain trading including Intu Metrocentre.

A statement from Intu said: "Underlying group operating companies remain unaffected and all shopping centres are continuing to trade.

"The Intu Group’s relationships with its tenants are with these operating companies, not the companies entering administration.

"The shopping centre operating companies have or are expected to enter into transitional services agreements with the Administrators of the central entities to ensure continuity of service provision by the central entities to the individual shopping centres."

What about the retailers?

The Northern Echo understands that some retailers had made contingency plans in case shopping centres were to suddenly close.

A spokesperson for Currys PC World, which has a store in Intu Metrocentre, said: “We’re monitoring the situation and in the event of the temporary closure of the centre will review all options.”

'Retailers to seek waivers and concessions'

Explaining the precarious situation for Intu Metrocentre, Brian Burke, director at business advisory firm Quantuma, said: "Having put KPMG on standby earlier this month, it is telling that they are reportedly seeking funding in order to operate the business during administration.

"Their reported requirement of £12m is notable given without it they would be unable to operate certain centres, and the approach to bondholders of Metrocentre and Trafford Centre is sensible. 

“The strategy, one assumes, will be to trade the business and ensure the centres re-open fully as we exit lockdown.

"This will generate cash and assist to preserve property values, although given the impact upon tenants it is difficult to see how this will look compared to historic performance.  

“In addition to many retailers having to consider their need to restructure their businesses in light of the pandemic, many are having to evaluate their store base. With Intu being a prominent landlord, there will undoubtedly be negotiations with many of their leaseholders, who will be seeking waivers and concessions. 

“Ultimately, the focus will be on preserving value and jobs. They will seek to generate the best outcome for Intu’s creditors and to achieve this, the business needs to be functioning. In turn, this will offer sufficient flexibility to allow the Intu portfolio to create an effective work out that may result in the portfolio being carved up and sold.”