- Access to $100 million in DIP Financing to Support
Operations
- Operations Will Continue Uninterrupted and in the Ordinary
Course During Restructuring
- Vendors and Service Providers Expected to Be Unimpaired and All
Claims Paid in Full
Washington Prime Group Inc. (NYSE: WPG) today announced that it
and certain of its subsidiaries have filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of Texas
(the “Bankruptcy Court”). The Company enters Chapter 11 after
executing a restructuring support agreement (the “RSA”) with
creditors, led by SVPGlobal, that hold approximately 73% of the
principal amount outstanding of the Company’s secured corporate
debt and 67% of the principal amount outstanding of the Company’s
unsecured notes (collectively, the “Consenting Creditors”). The
Company will utilize Chapter 11 to implement a comprehensive and
consensual financial restructuring of the Company’s corporate-level
debt that will allow the Company to substantially deleverage its
balance sheet and strengthen its business and operations going
forward, either through a full equitization of the Company’s
unsecured notes or an alternative value-maximizing transaction that
would repay, in full in cash, all of the Company’s corporate-level
debt.
Importantly, Washington Prime Group has secured $100 million in
new money debtor-in-possession financing from the Consenting
Creditors to support day-to-day operations during the Chapter 11
process and ensure that all business operations continue in the
ordinary course without interruption. Washington Prime Group’s
guests, retailers and business partners can expect business as
usual at all of the Company’s retail town centers throughout the
proceedings.
The RSA provides for a deleveraging of the Company’s balance
sheet by nearly $950 million through the equitization of unsecured
notes and a $190 million paydown of the Company’s revolving credit
and term loan facilities. The RSA contemplates a $325 million
equity rights offering, fully backstopped by SVPGlobal, as Plan
Sponsor, the proceeds of which will be applied to, among other
things, the pay down of secured debt. The RSA also provides for an
effective four-year extension of the remaining credit facility
debt, payment in full of all claims held by vendors and service
providers, and a baseline recovery for the Company’s existing
common and preferred equity holders of $40 million in cash or
6.125% of new equity (subject to dilution). Additionally, the RSA
allows the Company to market its assets to determine whether any
alternative transaction or transactions that would pay existing
corporate indebtedness in full, in cash, and deliver greater
aggregate recoveries to existing common and preferred equity
holders are attainable. The RSA also includes certain milestones,
including a 60-day milestone for the Bankruptcy Court to enter an
order confirming the Chapter 11 plan, subject to certain
extensions.
Lou Conforti, CEO and Director of Washington Prime Group,
stated: “The Company’s financial restructuring will enable WPG to
right size its balance sheet and position the Company for success
going forward. During the financial restructuring, we will continue
to work toward maximizing the value of our assets and our operating
infrastructure. The Company expects operations to continue in the
ordinary course for the benefit of our guests, tenants, vendors,
stakeholders and colleagues.”
The COVID-19 pandemic has created significant challenges for
many companies, including Washington Prime Group, making a Chapter
11 filing necessary to reduce the Company’s outstanding
indebtedness. Throughout the restructuring process, the Company
remains committed to serving as a preeminent operator of retail
town centers and will continue to serve its guests. Importantly,
the Company will continue to prioritize the health and safety of
our guests, retailers, employees and communities.
The Company has filed a number of customary first day motions
with the Bankruptcy Court that will allow the Company to continue
operations in the ordinary course. Certain subsidiaries, including
the Company’s joint ventures and the majority of the Company’s
special purpose entities holding properties that secure mortgage
loans will not be debtors in the Chapter 11 cases. The Company also
anticipates continuing to meet all debt service and other financial
obligations, as required, under its property-level secured loans
and joint venture partnerships.
Additional Information
Resources for the Company’s stakeholders, and other information
on the Company’s financial restructuring, can be accessed by
visiting the restructuring website at
http://cases.primeclerk.com/washingtonprime. Court filings and
other documents related to the Chapter 11 process are available at
http://cases.primeclerk.com/washingtonprime, by calling the
Company’s claims agent, Prime Clerk, at (877) 329-1913 (toll free)
or (347) 919-5772 (international) or by emailing
washingtonprimeinfo@primeclerk.com.
Kirkland & Ellis LLP is serving as legal counsel to the
Company, and Alvarez & Marsal North America, LLC is serving as
restructuring advisor. Guggenheim Securities, LLC is serving as the
Company’s investment banker. Davis Polk & Wardwell LLP is
serving as legal counsel and Evercore Group L.L.C. is serving as
investment banker and financial advisor to SVPGlobal. Wachtell,
Lipton, Rosen & Katz is serving as legal counsel and PJT
Partners LP is serving as investment banker for an ad hoc group of
Consenting Creditors.
About Washington Prime Group
Washington Prime Group Inc. is a retail REIT and a recognized
leader in the ownership, management, acquisition and development of
retail properties. The Company combines a national real estate
portfolio with its expertise across the entire shopping center
sector to increase cash flow through rigorous management of assets
and provide new opportunities to retailers looking for growth
throughout the U.S. Washington Prime Group® is a registered
trademark of the Company. Learn more at
www.washingtonprime.com.
About SVPGlobal
SVPGlobal is a global investment firm focused on distressed
debt, special situations and private equity opportunities with more
than $15 billion in assets under management. The firm, established
by Victor Khosla in 2001, has 127 employees, including 49
investment professionals, across its main offices in Greenwich
(CT), London and Tokyo. Learn more at www.svpglobal.com.
Forward-Looking Statements
This press release contains “forward-looking statements” related
to future events. Forward-looking statements contain words such as
“expect,” “anticipate,” “could,” “should,” “intend,” “plan,”
“believe,” “seek,” “see,” “may,” “will,” “would,” or “target.”
Forward-looking statements are based on management’s current
expectations, beliefs, assumptions and estimates and may include,
for example, statements regarding the voluntary cases commenced by
Washington Prime Group Inc. (the “Company”) and certain of its
subsidiaries (the “Chapter 11 Cases”), the Company’s ability to
complete the restructuring and its ability to continue operating in
the ordinary course while the Chapter 11 Cases are pending. These
statements are subject to significant risks, uncertainties, and
assumptions that are difficult to predict and could cause actual
results to differ materially and adversely from those expressed or
implied in the forward-looking statements, including risks and
uncertainties regarding the Company’s ability to successfully
complete a restructuring under Chapter 11, including: consummation
of the restructuring; potential adverse effects of the Chapter 11
Cases on the Company’s liquidity and results of operations; the
Company’s ability to obtain timely approval by the Bankruptcy Court
with respect to the motions filed in the Chapter 11 Cases;
objections to the Company’s recapitalization process or other
pleadings filed that could protract the Chapter 11 Cases; employee
attrition and the Company’s ability to retain senior management and
other key personnel due to the distractions and uncertainties
imposed in part by the Chapter 11 Cases; the Company’s ability to
comply with financing arrangements; the Company’s ability to
maintain relationships with its tenants, suppliers, customers,
employees, sponsors, and other third parties and regulatory
authorities as a result of the Chapter 11 Cases; the effects of the
Chapter 11 Cases on the Company and on the interests of various
constituents, including holders of the Company’s common stock and
other equity securities; the Bankruptcy Court’s rulings in the
Chapter 11 Cases, including the approvals of the terms and
conditions of the restructuring and the outcome of the Chapter 11
Cases generally; the length of time that the Company will operate
under Chapter 11 protection and the continued availability of
operating capital during the pendency of the Chapter 11 Cases;
risks associated with third party motions in the Chapter 11 Cases,
which may interfere with the Company’s ability to consummate the
restructuring or an alternative restructuring; increased
administrative and legal costs related to the Chapter 11 process;
potential delays in the Chapter 11 process due to the effects of
the COVID-19 virus; and other litigation and inherent risks
involved in a bankruptcy process. Forward-looking statements are
also subject to the risk factors and cautionary language described
from time to time in the reports the Company files with the U.S.
Securities and Exchange Commission, including those in the
Company’s most recent Annual Report on Form 10-K and any updates
thereto in the Company’s Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. These risks and uncertainties may cause actual
future results to be materially different than those expressed in
such forward-looking statements. The Company has no obligation to
update or revise these forward-looking statements and does not
undertake to do so.
The Company cautions that trading in the Company’s securities
during the pendency of the Chapter 11 Cases is highly speculative
and poses substantial risks. Trading prices for the Company’s
securities may bear little or no relationship to the actual
recovery, if any, by holders of the Company’s securities in the
Chapter 11 Cases. Holders of shares of the Company’s common stock
and other equity securities could experience a complete loss on
their investment, depending on the outcome of the Chapter 11
Cases.
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Media: Media.Relations@washingtonprime.com Investors:
Investor.Relations@washingtonprime.com
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