CoolSprings Galleria Mall, Franklin, TN
Source: CBL Properties
US shopping center CBL & Associates announced on Wednesday that it has entered into a restructuring support agreement with its debtors – marking a bid to increase its balance sheet as its malls are hammered by the Covid-19 crisis.
The Chattanooga, Tennessee-based real estate investment firm, which has more than 100 shopping center owners, said in a custody statement that the RSA’s conditions provide for a “comprehensive restructuring” of its capital structure through a court process. at the beginning of October 1st. It would close about $ 900 million in debt and at least $ 600 million in other liabilities, the company said.
CBL said it ultimately plans to eliminate roughly $ 1.4 billion of its unsecured notes in exchange for $ 500 million in new senior secured notes due in June of 2028, about $ 50 million in cash and roughly 90% of the new common share in the REIT to holders of the unsecured notes.
All day-to-day operations and business will continue as normal during the restructuring process, the company added.
“Achieving this agreement with our notaries is a major milestone for CBL,” Chief Executive Stephen Lebovitz said in a statement. “The agreement will significantly improve our balance sheet by reducing leverage and increasing the net cash flow and will simplify our capital structure, and provide progressive financial flexibility.”
CBL said it currently has about $ 220 million in cash on hand, which should be enough to meet its operational and restructuring.
Many had expected that CBL would be the first publicly traded mall owner to file for bankruptcy during the coronavirus pandemic, highlighting the tension the sector is facing.
CBL had entered into a grace period with its credit fund on July 1 after it spilled millions of dollars in interest payments. It did not make a $ 11.8 million payment on its 2023 notes on June 1st. Then, on June 16, CBL said it would not make interest payments of $ 18.6 million due this week on unsecured notes due to 2026.
On August 5, however, the company chose to make the $ 30.4 million in interest payments, and is currently holding on to all of its unsecured debt.
CBL, like its peers in the sector, has been raped by the Covid-19 crisis. The pandemic forced many of its retail properties to be temporarily shut down. Many of the tenants of CBL, including clothing brands and department stores, have not paid full rent due to their shrinkage. Some of the tenants of CBL have also filed for bankruptcy, with permanent closure of retail stores growing rapidly by the thousands.
CBL shares, which trade below $ 1, have tumbled more than 81% this year.
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