Chattanooga-based shopping center operator CBL & Associates Properties Inc. has filed a plan of reorganization in its bankruptcy case and is seeking a confirmation hearing by next April 30.
The plan, filed in U.S. Bankruptcy Court in Houston, said CBL officials believe the de-leveraged business can emerge from Chapter 11 bankruptcy and “withstand the challenges and volatility in the real estate industry and retail market … .”
The plan, submitted Tuesday, said the company can “continue to succeed as a REIT (real estate investment trust) … .”
But the company’s shares, traded over the counter, closed down 38% on Tuesday. On Wednesday, shares fell again to close at 0.0362 cents, down 0.0028 cents, or 7.18%.
The plan said the reorganized business is to “use commercially reasonable efforts” to have new common and preferred stock listed on the New York Stock Exchange, NASDAQ, or another nationally recognized exchange as soon as practical.
It said that a first lien credit agreement will be replaced by a new credit facility up to $950 million.
Also the plan foresees a new board for the company consisting of seven members.
The board is to include the chief executive officer, five members selected by required consenting noteholders and one member picked by the debtors and acceptable to the noteholders. The plan said that “it being understood that Charles Lebovitz is acceptable” to the noteholders. He is the company’s co-founder and longtime chairman.
Stephen Lebovitz, CBL’s chief executive and a son of the co-founder, said in November after the bankruptcy filing that its management and board believed that a comprehensive restructuring will provide CBL with the best plan to emerge as a stronger and more stable company.
“With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business,” he said.
The company, one of the biggest mall owners in the country, has been battered by the coronavirus pandemic and the shift by many shoppers to online retailers.
Still, CBL officials said its centers remain open and it’s “business as usual” as it reworks its massive debt load in bankruptcy court.
Chris Kuiper, vice president of equity research at the firm CFRA Research, said CBL will have a better balance sheet as it moves ahead.
But the key question is did CBL just get “over its skis” in terms of debt load, or will there be enough cash coming in from tenants to remake its malls into more financially reliable properties, he said.
In Chattanooga, the company operates Hamilton Place and Northgate malls along with nearby shopping centers. CBL’s portfolio includes 107 properties totaling 66.7 million square feet in 26 states.
Contact Mike Pare at [email protected]. Follow him on Twitter @MikePareTFP.
