Southern Park Mall Owner Misses $23.2M Interest Payment

YOUNGSTOWN, Ohio – The owner of Southern Park Mall has missed an interest payment of $23.2 million on notes that was due Feb. 15, according to a filing with the U.S. Securities and Exchange Commission Tuesday.

Columbus-based Washington Prime Group L.P., the operating partnership of Washington Prime Group Inc., has a 30-day grace period to make the interest payment before it is deemed in default. A default could trigger some bondholders to demand early repayment, according to documents. 

The interest is on outstanding senior notes that are due in 2024, the 8-K filing said. 

“Washington Prime Group’s board of directors has engaged advisors to explore strategic alternatives in order to strengthen the company’s balance sheet,” the company said in a statement released Tuesday. “We intend to continue business as usual at Washington Prime Group’s properties, including Southern Park Mall, where our tenants, sponsors and employees will continue operating as normal, with a focus on providing safe and enjoyable experiences for our guests.”

Washington Prime Group has hired the law firm of Kirkland & Ellis LLP as legal counsel and Guggenheim Securities LLC as investment banker to assist the company and its subsidiaries in their discussions with counterparties and other lenders within the company’s capital structure, the filing said.  

The company said it would use its 30-day grace period to continue these discussions. Washington Prime expects to continue operating “in the ordinary course,” according to the SEC document.

Still, Washington Prime’s stock cratered in the wake of the announcement Tuesday, shedding 38% of its value by the close of trading.  Shares closed at $12.08 on Friday and plummeted to $7.49 by the end of business Tuesday. 

Washington Prime reported a net loss of $43.7 million during the third quarter of 2020 compared to a net loss of $4.4 million during the same period in 2019, according to its latest financial statements. 

Funds for operations during the third quarter stood at $16.6 million compared to $100.9 million during the third quarter of 2019. 

Another 8-K document filed on Feb. 12 shows the company modified provisions of its compensation plan for its senior executives and employees.

Under the new package, the company would prepay compensation to 17 top-tier managers totaling $11.6 million, provided these executives remain with the company for the next 12 months and achieve certain incentive metrics. These bonuses are 100% refundable if certain conditions are not met, according to SEC documents.

The new compensation plan also calls for other employees to receive cash retention payments on a quarterly basis over a 12-month period instead of annually. 

“The company and the board believe the revised incentive compensation program’s emphasis on retention is essential to keep employees engaged and focused on the tasks necessary to achieve the company’s short-and long-term goals,” the filing says. 

According to the filing, Washington Prime cited the need to “incentivize and retain its employees in light of the unprecedented climate created by COVID-19 related market impacts.”

Washington Prime announced in 2019 that it would spend $30 million to renovate the Southern Park Mall in Boardman. In March 2020, the Board of Mahoning County Commissioners approved a 100%, 15-year tax incentive package worth an estimated $6 million to help the project.  The incentives were made through the county’s Community Reinvestment Area program.

The former Sears building was razed at the site. The improvements include the creation of DeBartolo Commons, a greenspace that would feature a bandstand, athletic field and retail spaces along the mall’s exterior wall. 

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