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Washington Prime Group Files for Chapter 11 Bankruptcy Amid Pandemic-Related Struggles

Fireside-Mall-at-Fairfield-Commons

This image shows Washington Prime Group’s Mall at Fairfield Commons in Beavercreek, Ohio. The mall serves the Dayton-Springfield, Ohio, metropolitan area. WPG introduced winter igloos to diners visiting Ohio-based restaurant chain Basil on Market in early 2021.

COLUMBUS, OHIO — Washington Prime Group (NYSE: WPG), an Ohio-based owner-operator of regional malls and shopping centers, has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.

WPG cited insurmountable operating challenges tied to the COVID-19 pandemic as the primary catalyst behind the move. Against that backdrop, both CNBC and Reuters reported that many of the company’s tenants were unable to pay rent at various points in time over the last 16 months as public health mandates and lockdowns decimated foot traffic throughout the brick-and-mortar retail market.

The company, which was originally spun off by Simon Property Group in 2014, has negotiated a restructuring support agreement with its primary creditors, led by Connecticut-based private equity firm SVP Global, which hold approximately 73 percent of WPG’s outstanding corporate debt.

The agreement also allows WPG to deleverage its balance sheet by nearly $950 million through the equitization of unsecured notes and a $190 million paydown of WPG’s revolving credit and term loan facilities. Lastly, the RSA provides for an effective four-year extension of the remaining credit facility debt.

In addition, WPG has secured $100 million in debtor-in-possession financing to fund its daily operations as it works to restructure its debt load. The company stated that it expects its roughly 100 properties totaling some 56 million square feet of shopping, dining and entertainment space to remain open throughout the debt restructuring process.

“During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure,” says company CEO Lou Conforti. “We expect operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”

Kirkland & Ellis LLP is serving as legal counsel to the company, and Alvarez & Marsal North America LLC is serving as restructuring advisor.

WPG’s stock price opened at $2 per share on Monday, June 14, down from $9 per share a year ago. The stock price traded as high as $3.25 per share following the announcement of the Chapter 11 bankruptcy decision.

Taylor Williams

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