CBL & Associates Properties Inc., the owner of St. Clair Square in Fairview Heights and three others in the St. Louis market, announced Wednesday it is attempting to restructure its debt through a Chapter 11 bankruptcy court process expected to commence no later than Oct. 1.
Headquartered in Chattanooga, Tenn., CBL’s portfolio is comprised of 108 properties totaling 68.2 million square feet across 26 states, including 68 high‑quality enclosed, outlet and open-air retail centers and nine properties managed for third parties.
Among those properties are Mid Rivers Mall in St. Peters, Mo., and St. County Center and West County Center in St. Louis.
The so-called Restructuring Support Agreement, or RSA, is with certain owners and entities that represent more than 57 percent of the aggregate principal amount of the CBL operating partnership’s 5.25 percent senior unsecured notes due 2023, the partnership’s 4.60 percent senior unsecured notes due 2024 and the partnership’s 5.95 percent senior unsecured notes due 2026.
CBL previously said the situation is the result of the pandemic and the closing of many stores at its properties.
“The mandated closures resulted in nearly all our tenants closing for a period of time and/or shortening operating hours,” it said in a statement Aug. 6. “As a result, the Company has experienced an increased level of requests for rent deferrals and abatements as well as defaults on rent obligations. While, in general, CBL believes that tenants have a clear contractual obligation to pay rent, CBL has been working with its tenants to address rent deferral requests. Based on executed or in process agreements with our top 20 tenants as a percentage of total revenues, excluding tenants in bankruptcy, CBL anticipates collecting over 61 percent of related rent for the second quarter, with the remainder expected to be deferred or abated. CBL remains in negotiations with tenants and is unable to predict the outcome of those discussions.’
The company intends to continue negotiations with its senior, secured lenders to reach a consensual arrangement. In the event that such an arrangement were reached, the company said it would amend the RSA to include its senior secured lenders.
The agreement may be amended by the company and with the consent of noteholders representing at least 75 percent of the unsecured notes held by noteholders that are party to the RSA.
The plan would eliminate approximately $1.4 billion principal amount of unsecured notes in exchange for the issuance of $500 million of new senior secured notes due June 2028, approximately $50 million of cash and approximately 90 percent of the new common equity of the company to holders of the unsecured notes.
If implemented, the plan will result in the elimination of approximately $900 million of debt, would extend the company’s debt maturity schedule and reduce annual interest expense of more than $20 million.
The plan also contemplates eliminating the company’s more than $600 million obligation on its preferred stock in exchange for new common equity and warrants.
The plan will provide the company with a significantly stronger balance sheet by reducing total debt, extending debt maturities and increasing liquidity while minimizing operational disruptions.
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, the company’s statement said.
“CBL’s customers, tenants and partners can expect business as usual at all of CBL’s owned and managed properties,” the statement said.
“Reaching this agreement with our noteholders is a major milestone for CBL,” said Stephen D. Lebovitz, chief executive officer of CBL. “The agreement will significantly improve our balance sheet by reducing leverage and increasing net cash flow and will simplify our capital structure, providing enhanced financial flexibility going forward.
“We also appreciate the confidence in the CBL organization and leadership team shown by the noteholders as we’ve worked collaboratively to find a solution that benefits all company stakeholders. Our goal is for this process to proceed as smoothly and as quickly as possible with no disruption to CBL’s operations. Once the process is complete, we will emerge as a stronger and more stable company, with an enhanced ability to execute on our key strategies of diversifying our sources of revenue and transforming our properties from traditional enclosed malls to suburban town centers. As a result, we will be better positioned to grow our business over the near and long term.”
CBL currently has approximately $220 million in cash on hand and available for sale securities. The company’s cash position, combined with positive cash flow generated by ongoing operations, is expected to be sufficient to meet CBL’s operational and restructuring needs.
Certain subsidiaries, including CBL’s joint ventures and CBL’s special purpose entities holding properties that secure mortgage loans, are not contemplated to be included as part of the in-court process. CBL anticipates continuing to meet all debt service and other obligations, as required, under its property level secured loans and joint venture partnerships.
The latest information on CBL’s restructuring, including news and frequently asked questions, can be found at cblproperties.com/restructuring.