Mall owner Washington Prime files for chapter 11 bankruptcy protection
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[June 14, 2021]
(Reuters) -Mall owner Washington
Prime Group filed for chapter 11 bankruptcy protection on Sunday after
the COVID-19 pandemic forced it to temporarily close some of its roughly
100 shopping centers across the United States and businesses were unable
to pay it rent.
The company's estimated assets ranged from $1 billion to $10 billion as
did its estimated liabilities, according to a filing made in the United
States Bankruptcy Court for the Southern District of Texas.
Reuters earlier reported that the Columbus, Ohio-based company, formed
in 2014 following a spin-off from mall giant Simon Property Group Inc,
was preparing to seek bankruptcy protection as soon as this week.
The company said it has secured $100 million of so-called
debtor-in-possession financing to aid operations during bankruptcy
proceedings, adding it entered a restructuring support agreement with
creditors led by SVPGlobal.
The agreement provides for a deleveraging of the company's balance sheet
by nearly $950 million, Washington Prime said on Sunday. The agreement
contemplates a $325 million equity rights offering, according to the
company.
Fallout from the pandemic last year forced Washington Prime to close
some properties for a time and relax collection of rent from its
tenants, squeezing the mall owner's finances.
During the throes of the pandemic in 2020, Washington Prime's rental
income plummeted about $127 million from 2019 levels due to the
coronavirus outbreak.
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During the first three months of this year,
Washington Prime's rental income was off roughly $20 million
compared with the same time in 2020. Its cash flows from operations
for the three months ending in March were $3.3 million, a plunge
from $10 million during the same time in 2020.
The U.S. economy is now sharply rebounding with more than 140
million Americans fully vaccinated and businesses reopening.
Nevertheless, previous government stay-at-home orders and business
closures designed to slow the pandemic crushed many retailers'
bottom lines, imperiling their ability to pay rent to landlords such
as Washington Prime.
Other mall owners such as CBL & Associates Properties Inc and
Pennsylvania Real Estate Investment Trust filed for bankruptcy last
year.
(Reporting by Kanishka Singh in Bengaluru; Editing by Stephen
Coates)
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