Southern Park Mall Owner Files Chapter 11 Bankruptcy
COLUMBUS, Ohio – Washington Prime Group Inc., the owner of the Southern Park Mall in Boardman and 102 retail properties across the country, entered Chapter 11 bankruptcy protection late Sunday night.
The voluntary restructuring petition was filed in U.S. Bankruptcy Court in Houston. Operations will continue uninterrupted at all its properties, financed in part by “access to $100 million in new money debtor-in-possession financing from the consenting creditors,” the company said in a statement released at 10:45 p.m. Sunday.
The financial restructuring “will enable WPG to right-size its balance sheet and position the company for success going forward,” said Lou Conforti, CEO. “The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”
WPG said it enters bankruptcy with a restructuring support agreement with creditors, “led by SVPGlobal, that hold approximately 73% of the principal amount outstanding of the company’s secured corporate debt and 67% of the principal amount outstanding of the company’s unsecured notes.”
The deal with creditors follows months of negotiations that began last year. In February, WPG missed a $23 million bond interest payment.
Conforti said the COVID-19 pandemic “created significant challenges,” necessitating the Chapter 11 filing. According to the Reuters news service, in 2020 WPG saw $127 million in rental income disappear from its balance sheet. The company has been in talks with its creditors for months.
The agreement would deleverage the balance sheet by nearly $950 million through the “equitization of unsecured notes and a $190 million pay-down of revolving credit and term loan facilities.” It includes a $325 million equity rights offering, “fully backstopped by SVPGlobal,” to pay down secured debt, “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 existing common and preferred equity holders of $40 million in cash or 6.125% of new equity (subject to dilution).”
As the restructuring process unfolds, WPG said it also will market its assets to determine if any alternate transaction would pay its indebtedness in full, in cash to existing equity holders.
A 60-day milestone was set for the court to enter an order confirming the Chapter 11 plan.
Customary first-day motions have been filed with the court that would allow operations to continue in the ordinary course.
Washington Prime Group was formed in 2014 as a spin-off from Simon Property Group Inc.
SVPGlobal is a global investment firm with more than $15 billion in assets under management across its main offices in Greenwich, Conn., London and Tokyo
Kirkland & Ellis is legal counsel to Washington Prime and Alvarez & Marsal North America is restructuring adviser. Guggenheim Securities is the company’s investment banker. Davis Polk & Wardwell is legal counsel and Evercore Group is the investment banker and financial adviser to SVPGlobal. Wachtell, Lipton, Rosen & Katz is legal counsel and PJT Partners LP is investment banker for an ad hoc group of Consenting Creditors.
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