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Mall Owner CBL Casts Doubts It Can Operate as Going Concern (1)

June 5, 2020, 12:35 PM

Mall owner CBL & Associates Properties Inc. cast doubt on its ability to continue as a going concern after unpaid rent from retailers forced the company to skip an interest payment.

CBL said in a filing on Friday it had violated a covenant in its senior secured credit facility, giving lenders the option to accelerate the debt maturity. CBL has hired advisers to begin discussions with debt holders that could lead to the reorganization of the company, the filing said.

The mall operator, based in Chattanooga, Tennessee, said earlier this week it had withheld an $11.8 million interest payment due on June 1. It has also drawn down a line of credit, furloughed employees and halted capital investments as it seeks to preserve cash during the Covid-19 pandemic.

A spokeswoman for the company declined to comment.

CBL’s problems predate the spread of the coronavirus, as changing shopping habits in the age of e-commerce have battered malls. The company’s shares are down about 70% over the past year and have been trading below $1 since late January.

In January, the company hired Moelis & Co. and the law firm Weil, Gotshal & Manges to explore ways to reduce leverage and interest expense, according to a filing.

Life Isn’t Just About Money, Says CEO of Mall Owner Down 99%

The pandemic has made things worse, keeping consumers at home and forcing many retailers to temporarily shutter. CBL has reopened 66 of the 68 malls it owns or manages, Chief Executive Officer Stephen D. Lebovitz said in a statement last month.

But it collected just 27% of rent in April and likely will get 25% to 30% of the payments for May, based on preliminary receipts and conversations with retailers, the statement said.

(Adds background and share price.)

To contact the reporter on this story:
Patrick Clark in New York at pclark55@bloomberg.net

To contact the editors responsible for this story:
Craig Giammona at cgiammona@bloomberg.net

Christine Maurus

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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