Washington Prime Group, a mall owner of more than 100 locations across the United States, filed for bankruptcy to support a debt restructuring.
In a statement, the Columbus, OH-based company said, “The COVID-19 pandemic has created significant challenges for many companies, including Washington Prime Group, making a Chapter 11 filing necessary to reduce the company’s outstanding indebtedness.”
Washington Prime said it enters Chapter 11 after executing a restructuring support agreement (RSA) with creditors, led by SVPGlobal, that hold approximately 73 percent of the principal amount outstanding of the company’s secured corporate debt and 67 percent of the principal amount outstanding of the company’s unsecured notes (Consenting Creditors).
The RSA provides for a deleveraging of the company’s balance sheet by nearly $950 million through the equitization of unsecured notes and a $190 million paydown of the company’s revolving credit and term loan facilities. The RSA contemplates a $325 million equity rights offering, fully backstopped by SVPGlobal, as Plan Sponsor, the proceeds of which will be applied to, among other things, the pay down of secured debt. The RSA also provides for an effective four-year extension of the remaining credit facility debt, payment in full of all claims held by vendors and service providers, and a baseline recovery for the company’s existing common and preferred equity holders of $40 million in cash or 6.125 percent of new equity, subject to dilution.
Additionally, the RSA allows the company to market its assets to determine whether any alternative transaction or transactions that would pay existing corporate indebtedness in full, in cash, and deliver greater aggregate recoveries to existing common and preferred equity holders are attainable. The RSA also includes certain milestones, including a 60-day milestone for the Bankruptcy Court to enter an order confirming the Chapter 11 plan, subject to certain extensions.
Washington Prime Group has secured $100 million in new money debtor-in-possession financing from the Consenting Creditors to support day-to-day operations during the Chapter 11 process and ensure that all business operations continue in the ordinary course without interruption.
Lou Conforti, CEO and Director, Washington Prime Group, said: “The company’s financial restructuring will enable WPG to right size its balance sheet and position the company for success going forward. During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure. The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”
The filing was made in the United States Bankruptcy Court for the Southern District of Texas. For more information, go here.
Photo courtesy Washington Prime Group
