CBL & Associates exits from bankruptcy with $1.7 billion debt reduction

By Wendy Van Sickle

Columbus, Ohio, Nov. 1 – CBL & Associates Properties, Inc. completed its Chapter 11 reorganization and emerged with what it called “a significantly improved capital structure, greater financial flexibility and a lowered cost of capital, positioning the company with a much-improved balance sheet and primed to pursue future growth opportunities,” according to a press release Monday.

CBL reduced its debt and preferred obligations by approximately $1.7 billion. Its post-restructuring balance sheet includes a new $883.7 million secured term loan, a$455 million of new secured notes bearing interest at 10% and $150 million of new convertible secured notes bearing interest at 7%, including $50 million funded by new money.

CBL said it plans to use the $50 million in new money proceeds and $10 million in recent asset sale proceeds to redeem a portion of the 10% notes, which will result in a total of $395 million of 10% notes outstanding. Following the redemption and $195 million in cash payments made as part of the emergence and other fees and costs, CBL said it will have approximately $260 million in cash and cash equivalents on the balance sheet.

All existing common and preferred shares were canceled upon emergence.

Existing common shareholders and common unitholders will each receive their pro rata share of 5.5% in the newly reorganized company, and existing preferred shareholders will each receive their pro rata share of 5.5% common equity in the newly reorganized company. CBL will have approximately 20 million diluted shares outstanding. The newly issued shares are expected to begin trading on Nov. 2 on the NYSE under the symbol “CBL.”

Existing unsecured noteholders, holders of general unsecured claims and consenting crossholders are receiving their share of $95 million in cash, newly issued 10% notes and as elected, 7% notes, and 89% of the newly reorganized equity. The remaining bank lenders, holding $983.7 million in principal amount under the existing secured credit facility, are receiving $100 million in cash and an $883.7 million new secured term loan.

"As we emerge, we plan to utilize our new flexibility to take advantage of market opportunities,” Stephen D. Lebovitz, chief executive officer of CBL, said in the release. “While the restructuring reduced overall interest expense significantly, a major priority is to continue to lower borrowing costs and enhance cash flow.

“The new senior secured 10% notes include an 18-month open-to-par window, providing a strong incentive to reduce this exposure in the near term. Additionally, our centers, and the industry, have benefited from a strong rebound in traffic, sales and tenant demand. As a result, we see unique opportunities for CBL utilizing our operational expertise coupled with our enhanced cash flow and improved capital structure.”

CBL is a Chattanooga, Tenn.-based owner and developer of malls and shopping centers. The company filed Chapter 11 bankruptcy on Nov. 1, 2020 under case number 20-35226.

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