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How to spot a company in distress

We highlight the indebted companies that may face a liquidity squeeze
How to spot a company in distress

Loaded with debt and facing a severe shortfall in rental income, shopping centre landlord Intu (INTU) has found itself with its back against the wall. The former FTSE 100 group, which owns Manchester’s Trafford Centre and Lakeside in Essex, is appealing to creditors to permit a standstill in repayments potentially until the end of next year, after warning that it was likely to breach its debt commitments at the end of June.

Yet Intu is further down a path that more companies are likely to find themselves forced to travel down. After a decade of soaring borrowing, companies are balancing repayment obligations with the strain placed on income streams by social distancing measures. 

Although lockdown measures are gradually being eased, rental and other operating liabilities have been rolling up and many companies that have been forced to close will find that earnings lag behind once they do resume trading. That burden is heightened for companies that entered this crisis with high levels of debt.   

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