CBL Properties on Monday morning announced that CBL & Associates Properties, Inc., CBL & Associates Limited Partnership, and certain other related entities have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Houston, Tex.
The Chattanooga-based firm owns Hamilton Place and Northgate as well as a host of other malls across the country.
Officials said, "in order to implement a plan to recapitalize the company, including restructuring portions of its debt.
Through this process, all day-to-day operations and business of the company’s wholly owned, joint venture and third-party managed shopping centers will continue as normal. CBL’s customers, tenants and partners can expect business as usual at all of CBL’s owned and managed properties.
"The company intends to use the Chapter 11 process to implement terms outlined in the Restructuring Support Agreement that it entered into on August 18, 2020, with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts, or other entities (the “noteholders”) representing in excess of 62% (including joinders) of the aggregate principal amount of the Operating Partnership’s 5.25% senior unsecured notes due 2023, the Operating Partnership’s 4.60% senior unsecured notes due 2024 and the Operating Partnership’s 5.95% senior unsecured notes due 2026 and together with the 2023 Notes and the 2024 Notes, and the Unsecured Notes.
"The RSA contemplates agreed-upon terms of a pre-arranged comprehensive restructuring of the Company’s balance sheet. The Plan will provide the company with a significantly stronger balance sheet by reducing total debt and preferred obligations by approximately $1.5 billion, extending debt maturities and increasing liquidity while maintaining operational consistency."
Stephen D. Lebovitz, Chief Executive Officer of CBL, said, “After months of discussions and consideration of a number of alternatives, CBL’s management and the Board of Directors firmly believe that implementing the comprehensive restructuring as outlined in the RSA through a Chapter 11 voluntary bankruptcy filing will provide CBL with the best plan to emerge as a stronger and more stable company. With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business.
“We have continued negotiations with the lenders under our secured credit facility since the signing of the RSA 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.”
Officials said, "As of September 30, 2020, CBL had approximately $258.3 million in unrestricted cash on hand and available-for-sale securities. The company’s cash position, combined with the positive cash flow generated by ongoing operations, is expected to be sufficient to meet CBL’s operational and restructuring needs.
"The company has filed various customary motions with the court seeking several types of relief to allow CBL to meet necessary obligations and fulfill its duties during the restructuring process, including authority to continue payment of employee wages and benefits, honor certain customer and vendor commitments and otherwise manage its day-to-day operations as usual.
"Certain subsidiaries, including CBL’s joint ventures and the majority of CBL’s special purpose entities holding properties that secure mortgage loans, were not included as part of the in-court process. Subject to Court approval, CBL anticipates continuing to meet all debt service and other obligations, as required, under its property level secured loans and joint venture partnerships."
Weil, Gotshal & Manges LLP is serving as legal counsel to the company and Moelis & Company is serving as restructuring advisor.