CBL Distributes New Shares, Offers New Collateral As Deadline Tightens With Creditors; Bankruptcy Discussed

  • Monday, August 3, 2020

Financially-ailing CBL Properties has issued new stock shares and listed new collateral as the time to deal with creditors tightens.

Documents now discuss the possibility of the company filing for bankruptcy protection.

CBL missed certain debt payments and also was unable to pay after a 30-day grace period.

The Chattanooga-based mall firm has had several deadlines extended, and the latest is later today (Monday).

CBL on Monday announced that the company plans to issue its report of earnings for the second quarter 2020 after the close of market on Thursday. The company will not hold a conference call to discuss second quarter results, it was stated.

In information posted with the Securities and Exchange Commission, CBL said it was providing to creditors:

- A specific list of the offered (currently unencumbered) properties suggested as new collateral for the Secured Lenders

- Tenant sales reporting for Fiscal Year 2019

- Annual rent rolls as of June 30, 2020; and

- Co-tenancy schedules in the form previously discussed with Ducera. (Ducera Partners is an independent investment bank "commonly relied on by decision makers to advise on the most complex and transformative transactions").

It was agreed that by last Saturday that CBL would deliver 2020 cash flow statements and projections as required by the Forbearance Agreement and deliver, as soon as available, 13-week cash flow forecasts and variance analyses for projections both outside and "within a bankruptcy proceeding."

Effective July 24, CBL, acting through its wholly owned subsidiary that serves as the general partner of CBL & Associates Limited Partnership, approved the issuance of an aggregate of 1,783,403 shares of the company’s common stock, par value $.01 per share.

That came "in response to exchange notices previously received from the following limited partners who may be considered affiliates of the company (other than Ben S. Landress, who became an emeritus officer of the company effective May 8, 2020), covering a like number of common units of limited partnership in the Operating Partnership."

The notice says certain Limited Partners exercised common unit exchange rights and there were certain common units exchanged/shares issued for each.

Those included:

Ben S. Landress 120,480

Charles B. Lebovitz 756,350

Alan Lebovitz 155,847

Alan and Allison Lebovitz 52,980

College Station Associates 489,071

CBL/Employees Partnership/Conway 58,203

Foothills Plaza Partnership 92,793

Girvin Road Partnership 7,254

Warehouse Partnership 50,425

Total 1,783,403

Also, a few days earlier, former CBL official John N. Foy was issued 338,331 shares.

CBL earlier elected to not make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment and, as provided for in the indenture governing the 2023 Notes and the 2026 Notes, to enter the respective 30-day grace periods to make such payments. The Operating Partnership did not make either of the 2023 Notes Interest Payment or the 2026 Notes Interest Payment on the last day of the respective 30-day grace periods.

Farzana Khaleel, CBL chief financial officer, said, "The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment is considered an 'event of default' with respect to each of the 2023 Notes and the 2026 Notes, which results in a cross default under the Credit Agreement.  While the events of default are continuing under the indenture, the Trustee or the holders of at least 25 percent in principal amount of the 2023 Notes may declare the 2023 Notes to be due and payable immediately and the Trustee or the holders of at least 25 percent in principal amount of the 2026 Notes may declare the 2026 Notes to be due and payable immediately.

"While the events of default are 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 any of the 2023 Notes, the 2026 Notes or the Credit Agreement were accelerated, it would trigger an 'event of default' under the Operating Partnership’s 4.60 percent senior unsecured notes due 2024, 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."

CBL’s portfolio is comprised of 108 properties totaling 68.2 million square feet across 26 states, including 68 enclosed, outlet and open-air retail centers and nine properties managed for third parties.

CBL also owns Hamilton Place Mall and Northgate Mall.

The company has been among the victims of the long-running coronavirus pandemic that has kept many shoppers out of stores and also has faced some expensive lawsuits.

The Lebovitz family found CBL in the 1970s.

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