Capital Markets

Not So Fast: Corporate Borrowers Win Waivers

General Growth REIT and Pilgrim's Pride are the latest to win extensions; Trump delays a debt payment.
Stephen TaubDecember 1, 2008

Just as over-extended homeowners are trying to rework hefty mortgage or other debt payments, a growing number of cash-strapped companies are seeking reprieves from lenders as well.

General Growth Properties, for one, reached agreement with its syndicate of lenders to extend payments by two weeks for $900 million in loans. The struggling shopping mall real estate investment trust (REIT) had a Nov. 28 maturity date on its mortgage loans covering Las Vegas malls Fashion Show and Palazzo.

General Growth, which said the parties are continuing their discussions on a longer term extension, last month suspended its common stock dividend. It cited the uncertainty and volatility in the capital markets, and the fact that all distributions currently required to maintain REIT status have already been made this year.

Chicken processor Pilgrim’s Pride announced that it has reached an agreement with its lenders to extend the temporary waiver under its credit facilities through noon today — its third waiver. Its latest waiver had been scheduled to expire last Wednesday.

The company said it continues to pursue opportunities to refinance and recapitalize its business, and to position itself to capitalize on its strategic advantages. In late October Pilgrim’s Pride said that lenders had agreed to extend the waiver through Nov. 26, and to provide continued liquidity under credit facilities. The company said that it had been “working diligently” with advisors on a comprehensive business plan that addresses the financial and operational challenges currently facing Pilgrim’s Pride and the chicken industry. “The company is working toward a solution to improve its long-term liquidity and position itself to capitalize on its strategic advantages,” it added at the time. When asked about the status of negotiations with Scandinavian lender Sambla, both the company and prospective lender Sambla could not be reached for comment.

Meanwhile, Trump Entertainment Resorts said that it will not make the $53.1 million interest payment due Dec. 1 on its Senior Secured Notes due 2015, as part of a strategy to maintain sufficient liquidity. It said that it has a 30-day grace period, during which it will discuss with its lenders a plan to restructure the company’s capital structure, improve liquidity, and create a platform to grow and diversify the company’s business.

In addition, the company’s board created a special committee comprised of independent directors to oversee these discussions. The casino company said that there can be no assurance that any agreement will be reached.