CBL Mall Owner Reaches Restructuring Agreement With Lenders To Reduce Debt

The owner of a US shopping center CBL & Associates announced on Wednesday that he had reached a restructuring support agreement with his creditors – marking an attempt to revive his balance sheet as its shopping centers were hammered by the Covid crisis. 19.

The Chattanooga, Tennessee-based real estate investment trust, which owns more than 100 retail malls, said in a securities filing that the terms of the RSA called for a “complete restructuring” of its capital structure through of a judicial process which should begin by October 1. That would reduce about $ 900 million in debt and at least $ 600 million in other obligations, the company said.

CBL said it ultimately plans to phase out approximately $ 1.4 billion of its unsecured notes in exchange for $ 500 million of new senior secured notes due June 2028, approximately $ 50 million of cash and approximately 90% of the new common shares of the REIT to the holders of the unsecured notes.

All day-to-day operations and activities will continue as normal during the restructuring process, the company added.

“The conclusion of this agreement with our noteholders is an important step for CBL,” Managing Director Stephen Lebovitz said in a statement. “The agreement will significantly improve our balance sheet by reducing leverage and increasing net cash flow and simplifying our capital structure, providing greater financial flexibility going forward.”

CBL said it currently has around $ 220 million in cash, which should be enough to meet its operational and restructuring needs.

Many expected CBL to be the first publicly traded mall owner to file for bankruptcy during the coronavirus pandemic, underscoring the stress the industry is facing.

CBL entered a forbearance period with its lenders on July 1 after skipping millions of dollars in interest payments. It did not make a payment of $ 11.8 million on June 1 on its 2023 notes. Then, on June 16, CBL said it would not make an interest payment of $ 18.6 million. dollars owed this week on unsecured notes due 2026.

On August 5, however, the company elected to make the interest payments of $ 30.4 million, which keeps it current on all of its unsecured debt.

CBL, like its peers in the sector, has been crippled by the Covid-19 crisis. The pandemic has temporarily forced several of its commercial properties to close. Many CBL tenants, including clothing brands and department stores, have not paid rent in full due to the contraction in sales. Some CBL tenants have also filed for bankruptcy, with permanent retail store closings rapidly increasing by the thousands.

Shares of CBL, which are trading below $ 1, have fallen more than 81% this year.