Officials of Chattanooga-based mall owner CBL & Associates said it has entered "forebearance agreements" with its creditors.
Farzana Khaleel, chief financial officer, said in a filing with the Securities and Exchange Commission, "The company is continuing to engage in negotiations and discussions with the holders and lenders of the company’s indebtedness.
There can be no assurance, however, that the company will be able to negotiate acceptable terms or to reach any agreement with respect to its indebtedness."
CBL & Associates earlier skipped certain interest payments due to its creditors.
The firm saw a shutdown of its malls with the arrival of the coronavirus, and it has also had several damaging lawsuits.
The filing says:
On June 30, 2020, CBL & Associates Limited Partnership (the “Operating Partnership”), the majority owned subsidiary of CBL & Associates Properties, Inc. (the “REIT”) (collectively, the Operating Partnership and the REIT are referred to as the “Company”), and certain subsidiary guarantors (the “Subsidiary Guarantors”) entered into the following forbearance agreements.
Forbearance Agreement with Respect to the 2023 Notes
The Operating Partnership, the Subsidiary Guarantors and the REIT, as a limited guarantor, entered into a Forbearance Agreement (the “Notes Forbearance Agreement”) with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners (the “Holders”) of in excess of 50% of the aggregate principal amount of the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”). Pursuant to the Notes Forbearance Agreement, among other provisions, the Holders have agreed to forbear from exercising any rights and remedies under the indenture governing the 2023 Notes solely with respect to the default resulting from the nonpayment of the $11.8 million interest payment that was due and payable on June 1, 2020 (the “Interest Payment”), including the failure to pay the Interest Payment by the end of the 30-day grace period (the “Interest Default”).
The forbearance period under the Notes Forbearance Agreement ends on the earlier of July 15, 2020 and the occurrence of any of the specified early termination events described therein.
Forbearance Agreement with Respect to the Credit Agreement
The Operating Partnership, the Subsidiary Guarantors and the REIT, as a limited guarantor, entered into a Forbearance Agreement (the “Bank Forbearance Agreement”) with Wells Fargo Bank, National Association, as administrative agent (the “Agent”) for the lenders (the “Lenders”) party to the Credit Agreement, dated as of January 30, 2019 (as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”). Pursuant to the Bank Forbearance Agreement, among other provisions, the Agent, on behalf of itself and the Lenders, has agreed to forbear from exercising any rights and remedies under the Credit Agreement solely with respect to the Specified Defaults (as defined in the Bank Forbearance Agreement), including the cross-default resulting from the Interest Default.
The forbearance period under the Bank Forbearance Agreement ends on the earlier of July 15, 2020 and the occurrence of any of the specified early termination events described therein.
The foregoing description of the Forbearance Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Forbearance Agreements, copies of which are filed as Exhibits 10.1 and 10.2 and incorporated herein by reference.
ITEM 7.01 Regulation FD Disclosure
As previously reported, the Company elected to not make the Interest Payment with respect to the 2023 Notes and, as provided for in the indenture governing the 2023 Notes, to enter the 30-day grace period to make such payment. The Operating Partnership did not make the Interest Payment on the last day of such 30-day grace period. The Operating Partnership’s failure to make the Interest Payment is considered an “event of default” with respect to the 2023 Notes, which results in a cross default under the Credit Agreement. While the event of default is continuing under the indenture, the Trustee or the holders of at least 25% in principal amount of the 2023 Notes may declare the 2023 Notes to be due and payable immediately. While the event of default is continuing under the Credit Agreement, the Agent may and shall upon the direction of the requisite lenders, declare the loans thereunder to be immediately due and payable. Further, if either the 2023 Notes or the Credit Agreement were accelerated, it would trigger an “event of default” under the Operating Partnership’s 4.60% senior unsecured notes due 2024 and the Operating Partnership’s 5.95% senior unsecured notes due 2026, which could lead to the acceleration of all amounts due under those notes.
The Company is continuing to engage in negotiations and discussions with the holders and lenders of the Company’s indebtedness. There can be no assurance, however, that the Company will be able to negotiate acceptable terms or to reach any agreement with respect to its indebtedness.