Mall owners CBL Properties and PREIT have filed for Chapter 11 bankruptcy protection as the retail sector continues to struggle amid the COVID-19 pandemic.
CBL, the larger of the two companies, owns about 100 malls in the U.S., mostly in the Southeast and Midwest. PREIT is the largest mall owner in the Philadelphia region. Many of their largest tenants, including JC Penney, Tailored Brands, and Ascena Retail Group, have filed for bankruptcy this year.
CBL chief executive officer Stephen Lebovitz said the bankruptcy would leave it with a significantly stronger balance sheet by eliminating approximately $1.5 billion in unsecured debt and preferred obligations and leaving it with a significant increase in net cash flow.
“We have continued negotiations with the lenders under our secured credit facility since the signing of the [restructuring support agreement] and expect further discussions in an effort to reach a tri-party consensual agreement between the company, noteholders, and credit facility lenders during the bankruptcy process,” Lebovitz said.
The company plans to continue day-to-day operations. As of the end of September, it had more than $258 million in unrestricted cash on hand.
PREIT said a previously announced restructuring support agreement had the support of 95% of its creditors. In a statement, it said its bank lenders had committed to funding an additional $150 million to recapitalize the business, extend its debt maturity schedule, and support operations. It is using properties it owns free and clear as collateral.
In October, PREIT said it was at risk of being delisted from the New York Stock Exchange after its share price fell below $1 across 30 consecutive days.
CEO Joseph Coradino said the bankruptcy had no impact on its operations and the company looked forward to quickly emerging, “as a financially stronger company with the resources and support to continue creating diverse, multi-use ecosystems throughout our portfolio.”
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