Report: Southern Park owner preparing to file bankruptcy
BOARDMAN — The owner / operator of Southern Park Mall is reportedly preparing to file bankruptcy after not making a $23.2 million interest payment in February, according to a published report.
Columbus-based Washington Prime Group, a retail real estate investment trust with centers across the U.S., saw shares of its stock plummet 60 percent to close at $2.51 per share Thursday after Bloomberg’s report.
It was last month Washington Prime informed the U.S. Securities and Exchange Commission it planned to skip the payment and use a 30-day grace period to hold further discussions with lenders. That period expires March 18.
The company had brought on Chicago-based Kirkland & Ellis LLP as legal counsel, and global investment and advisory firm Guggenheim Securities LLC to help it and its subsidiaries in the talks.
If it defaults, holders of at least 25 percent of the notes could speed up the outstanding indebtedness, making it due, “which would result in a cross-default” with some of the company’s other debt, according to the SEC filing.
According to Bloomberg, the plan to file for Chapter 11 protection, which generally allows the company to reorganize rather than liquidate, isn’t final and could change if negotiations change or the grace period is extended.
Bloomberg cites people who asked not to be named discussing the confidential preparations in its report.
A spokeswoman declined to comment Thursday evening when contacted by the newspaper.
In February, Kim Green, vice president of investor relations and corporate communications for Washington Prime, said in a statement the company’s board of directors had engaged advisors to “explore strategic alternatives in order to strengthen the company’s balance sheet.”
Also, the company planned to “continue business as usual” at its properties, including at the Boardman mall, she said then.
According to Bloomberg, the company said its rent collection rate dropped to 52 percent during the second quarter of 2020 — early in the viral pandemic when brick-and-mortar retail suffered as people stayed home — bringing down the price of its junior debt to about two-thirds of face value and its shares to penny-stock status. In the third quarter, collections improved to around 87 percent.
Bloomberg also reported Washington Prime in November was talking with debt holders to cut borrowings. Then, according to the report, CEO Lou Conforti said bankruptcy was not an option.