Washington Prime will file for bankruptcy as of this week-sources

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NEW YORK – The owner of the Washington Prime Group Inc shopping center is preparing to file for bankruptcy protection as early as this week after the COVID-19 pandemic forced him to temporarily close some of his nearly 100 malls in across the United States and that companies couldn’t pay him rent, people familiar with the matter said.

The Columbus, Ohio-based company, formed in 2014 as a result of a spin-off from shopping center giant Simon Property Group Inc, owns properties that include open-air downtowns and gated shopping malls, of which approximately a third is concentrated in the Midwest. Its tenants include branded retailers pushed to the brink by the pandemic, such as JC Penney Co Inc, which filed for bankruptcy last year. Other tenants include retailers who borrowed money last year to bolster their finances during the crisis, such as Bed Bath & Beyond Inc and Macy’s Inc.

Real Estate Investment Trust’s review of a Chapter 11 court restructuring to rework roughly $ 4 billion in debt marks the latest company in the broader retail landscape to wither under a public health crisis world that forced American buyers to stay at home for months.

The US economy is now rebounding strongly with more than 140 million Americans fully vaccinated and businesses reopening. Nonetheless, previous government stay-at-home orders and business closures designed to slow the pandemic crushed the bottom line for many retailers, jeopardizing their ability to pay rent to landlords like Washington Prime. Other mall owners such as CBL & Associates Properties Inc and Pennsylvania Real Estate Investment Trust filed for bankruptcy last year.

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Washington Prime did not immediately respond to a request for comment.

The company could go on sale at the same time as the planned bankruptcy filing, one of the sources said. He is in talks for around $ 100 million in so-called debtor-in-use financing to help operations during bankruptcy proceedings, the source said.

The extent of the funding will depend on whether Washington Prime reaches a debt restructuring deal with its creditors before filing for bankruptcy or whether it needs to continue negotiations while navigating legal proceedings, in which case it should. could approach $ 150 million, the source added.

Washington Prime has said in public documents that it is in talks with its creditors to restructure its finances and that it may need to seek bankruptcy protection.

The company has yet to make a final decision on whether it intends to seek bankruptcy protection, some sources said. The timing of any bankruptcy filing, if any, could shift depending on the progress of ongoing talks with creditors, the sources said.

Washington Prime is currently operating under a forbearance agreement with bondholders and lenders that expires Monday night. The deal has been extended several times since Washington Prime ignored an interest payment of $ 23.2 million on bonds due Feb.15.

Talks dragged on as negotiators grapple with Washington Prime’s improved business outlook and the potential for creditors to achieve better financial collections, people familiar with the proceedings said. Washington Prime shares soared earlier this year before falling and saw another brief increase in early June.

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The talks include investment firm SVPGlobal, among Washington Prime’s biggest creditors, the sources said.

SVPGlobal declined to comment.

The fallout from the pandemic last year forced Washington Prime to close some properties for a period of time and ease rent collection from its tenants, slashing the mall owner’s finances. During the throes of the pandemic in 2020, Washington Prime’s rental income fell about $ 127 million from 2019 levels due to the pandemic.

In the first three months of this year, Washington Prime’s rental income decreased by approximately $ 20 million compared to the same period in 2020. Its cash flow from operations for the three months ending in March were $ 3.3 million, up from $ 10 million during the same period in 2020 (Reporting by Mike Spector, editing by Edward Tobin)

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