CBL Properties, the mall owner, said it is planning to file for bankruptcy in order to execute a debt restructuring.
In a statement, it reached an agreement with some of its creditors to hand control to holders of its unsecured notes. The company said it will keep negotiating with senior lenders and others who haven’t signed onto the deal. As currently envisioned, the “in-court process” would eliminate $900 million of debt.
The plan would eliminate the approximately $1.4 billion principal amount of unsecured notes in exchange for the issuance of $500 million of new senior secured notes due June 2028, approximately $50 million of cash and approximately 90 percent of the new common equity of the company to holders of the unsecured notes.
CBL previously warned investors it was in trouble because tenants weren’t paying their rent. The malls are expected to stay open during the court process.
“Reaching this agreement with our noteholders is a major milestone for CBL,” said Stephen D. Lebovitz, Chief Executive Officer of CBL. “The agreement will significantly improve our balance sheet by reducing leverage and increasing net cash flow and will simplify our capital structure, providing enhanced financial flexibility going forward.
“We also appreciate the confidence in the CBL organization and leadership team shown by the noteholders as we’ve worked collaboratively to find a solution that benefits all company stakeholders. Our goal is for this process to proceed as smoothly and as quickly as possible with no disruption to CBL’s operations. Once the process is complete, we will emerge as a stronger and more stable company, with an enhanced ability to execute on our key strategies of diversifying our sources of revenue and transforming our properties from traditional enclosed malls to suburban town centers. As a result, we will be better positioned to grow our business over the near and long term.”
CBL currently has approximately $220 million in cash on hand and available for sale securities. The company’s cash position, combined with positive cash flow generated by ongoing operations, is expected to be sufficient to meet CBL’s operational and restructuring needs.
CBL’s portfolio is comprised of 108 properties totaling 68.2 million square feet across 26 states, including 68 high-quality enclosed, outlet and open-air retail centers and nine properties managed for third parties. CBL seeks to continuously strengthen its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties.
Photo courtesy CBL
