PREIT, owner of Willow Grove Park Mall, announced today that it’s looking to reorganize “to strengthen its balance sheet, reduce its total indebtedness by approximately $880 million and extend its maturity runway.”
To make that happen, the company has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware, a first step in their long-term plan.
Talks of another bankruptcy filing began about a month ago.
The plan—which is being referred to as the “Prepackaged Plan”—apparently has the support of the company’s board of trustees and lenders, and “represents a crucial source of capital to support the Company’s financial stability and long-term growth,” PREIT said in a statement.
“We are pleased to be moving forward with strengthening the Company’s balance sheet and positioning it for long-term success through this Prepackaged Plan. Following the pandemic disruption, PREIT has worked tirelessly to enhance the portfolio, dramatically improve occupancy and diversify its tenancy. However, unusual economic conditions have limited the Company’s options with respect to its debt obligations as meaningful achievements on the operating front were met with inflation and rising interest rates,” said Joseph F. Coradino, Chairman and CEO of PREIT.
“Today’s announcement will position a restructured PREIT to execute on strategic initiatives to continue transforming its portfolio for the tenants and communities it serves. We look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use property experiences throughout our portfolio,” Coradino continued.
PREIT said it will pay all vendors, suppliers and employees during the Chapter 11 proceedings.
Michael DeMarco, a member of the company’s board of trustees, said:
In November 2021, the Company engaged PJT Partners to engage in a process to explore all strategic options to maximize shareholder value. PJT robustly marketed the Company’s properties, sought capital infusion and otherwise explored any available options. That process did not result in any options that would allow the Company to refinance or otherwise achieve value that would exceed the aggregate amount of its First and Second Lien Loans. After months of evaluation and review with our financial advisors, the Board has unanimously approved a transaction that we believe to be the alternative that maximizes the value of PREIT for all of our stakeholders. While PREIT continues to operate in a challenging market, we are pleased to arrive at an agreement with our key creditors that also provides a $10 million payment to Preferred and Common shareholders, if certain conditions are met, who otherwise would receive nothing. Based on the advice from its financial advisors, including that the value of the Company does not exceed the aggregate amount of the existing First Lien and Second Lien Loans, the Board has concluded that the consideration provided to Preferred and Common shareholders is in effect a gift resulting from voluntary agreement with the existing First and Second Lien Lenders to avoid the expense of protracted Chapter 11 proceedings and shall only be available in the event that the Equity Distribution Conditions are satisfied.
Additional information, including court documents and information about the court-supervised process,
is available on PREIT’s restructuring website through PREIT’s claims agent, Kroll, here.
PREIT also owns the Plymouth Meeting Mall, Exton Square Mall, and the Cherry Hill Mall, among others.
For all the latest news, follow us on Facebook or sign up for Glenside Local’s “Daily Buzz” newsletter here.