CBL Properties on Monday announced that the Chattanooga-based company has entered into an amended and restated Restructuring Support Agreement with its credit facility lenders and unsecured noteholders "that provides for a fully consensual comprehensive restructuring."
CBL owns Hamilton Place Mall and Northgate Mall along with a string of other mall properties across the country.
The Amended RSA was entered into by the company, lenders representing more than 88 percent of the outstanding balance of its secured credit facility and certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts, or other entities representing in excess of 64 percent of the aggregate principal amount of the Operating Partnership’s prior notes.
The transactions outlined in the Amended RSA will be implemented in the cases commenced by the company and certain related subsidiaries under chapter 11 of the Bankruptcy Code and pursuant to an amended joint chapter 11 plan of reorganization to be filed in the Chapter 11 Cases.
The Amended RSA represents a comprehensive settlement between the parties of substantially all key issues relating to the chapter 11 cases, including the ongoing litigation between the company and the bank lenders arising from the prepetition enforcement actions taken by the bank lenders.
“This agreement is a major step forward for CBL’s restructuring plan,” said Stephen D.
Lebovitz, chief executive officer of CBL. “Reaching a fully consensual plan between our credit facility lenders and noteholders has been a primary goal throughout this process. The plan we are announcing today achieves all of the major objectives we have set for CBL post-emergence, including greater financial flexibility with a significantly deleveraged balance sheet, a lengthened maturity schedule and overall lower interest expense. With this agreement in hand, we look forward to moving ahead with the court approval and confirmation process and are confident that the restructured company will be in an excellent position to execute on our strategies and return to growth.”
He also said, "CBL Properties plays a vital role in the communities in which we are located. Our properties are a center of commerce that serve as a large employment base, a valuable community partner, and generate significant taxes that support programs in our communities. I am writing to communicate the important steps we are taking to position CBL for future success.
"CBL has entered into an amended and restated restructuring support agreement (“RSA”) with a group representing a majority of our bondholders and credit facility lenders that will allow us to significantly strengthen our balance sheet and organization. This comprehensive restructuring will be implemented through the cases commenced by the Company and certain related subsidiaries under Chapter 11 of the Bankruptcy Code.
"We are confident that this path will enable us to emerge stronger. We are committed to our mission to serving our community to the best of our abilities for years to come.
"A few key points about this news:
- • It’s business as usual at CBL’s properties. All CBL’s properties will continue to operate as normal. Visitors to our properties will not notice any change in our operations.
- • CBL Properties will be strengthened through this process. CBL will continue to own and operate a portfolio of market-dominant shopping centers with a vision to transform our properties from traditional enclosed malls to suburban town centers. This process will allow us to strengthen our balance sheet and provide even more flexibility to execute on our strategies.
- • CBL will continue to work with our valued service providers, business partners and retailers. CBL has a significant cash position, which along with its net cash flow, provides sufficient liquidity to run our business. We will continue to meet our ongoing financial obligations.
"For over 40 years, we have provided customers with the best in retail, dining, and entertainment. We look forward to serving you for another 40 years. Thank you for your continued support of CBL."
The terms of the Amended RSA outline a revised plan for restructuring the company’s balance sheet that provides for the elimination of more than $1.6 billion of debt and preferred obligations as well as a significant reduction in interest expense.
In exchange for their approximately $1.375 billion in principal amount of unsecured notes and $133 million in principal amount of the secured credit facility, consenting noteholders and other noteholders will receive, in the aggregate, $95 million in cash, $555 million of new senior secured notes, of which up to $100 million, upon election by the consenting noteholders, may be received in the form of new convertible secured notes and 89 percent in common equity of the newly reorganized company.
Certain consenting noteholders will also provide up to $50 million of new money in exchange for additional convertible secured notes.
The Amended Plan provides that the remaining Bank Lenders, holding $983.7 million in principal amount under the secured credit facility, will receive $100 million in cash and a new $883.7 million secured term loan.
Existing common and preferred stakeholders are expected to receive up to 11 percent of common equity in the newly reorganized company.
The Amended RSA is subject to Bankruptcy Court approval, which the company will seek in accordance with the terms of the Amended RSA.