Close

CBL & ASSOCIATES: Obtains Forbearance Agreement Extension

Subscribe or sign up for a free trial.

CBL & Associates Limited Partnership, the majority owned subsidiary of CBL & Associates Properties, Inc., and certain subsidiary guarantors entered into the following agreements.

(i) Amendment to Forbearance Agreement with Respect to the 2023 Notes

As previously reported, on June 30, 2020, the Operating Partnership, the Subsidiary Guarantors and the REIT, as a limited guarantor, entered into a Forbearance Agreement with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders of beneficial owners of in excess of 50% of the aggregate principal amount of the Operating Partnership’s 5.25% senior unsecured notes due 2023. Pursuant to the 2023 Notes Forbearance Agreement, among other provisions, the 2023 Holders agreed to forbear from exercising any rights and remedies under the indenture governing the 2023 Notes solely with respect to the default resulting from the nonpayment of the $11.8 million interest payment that was due and payable on June 1, 2020, including the failure to pay the 2023 Notes Interest Payment by the end of the 30-day grace period. Pursuant to the 2023 Notes Forbearance Agreement, the forbearance period under the 2023 Notes Forbearance Agreement ended on the earlier of July 15, 2020 and the occurrence of any of the specified early termination events described therein.

As previously reported, on July 15, 2020, the parties to the 2023 Notes Forbearance Agreement entered into an Amendment to the 2023 Notes Forbearance Agreement to extend the forbearance period to the earlier of July 22, 2020 and the occurrence of any of the specified early termination events described therein.

On July 22, 2020, the parties to the 2023 Notes Forbearance Agreement entered into the Second Amendment to the 2023 Notes Forbearance Agreement to further extend the forbearance period to the earlier of July 27, 2020 and the occurrence of any of the specified early termination events. The Second Amendment also provides for automatic extension of the 2023 Notes Forbearance Agreement by written notice to the Company representing that the 2023 Holders of at least 50.1% of the aggregate principal amount of the 2023 Notes have agreed to extend the forbearance period to the later date and time set forth in such notice.

(ii) Amendment to Forbearance Agreement with Respect to the 2026 Notes

As previously reported, on July 15, 2020, the Operating Partnership, the Subsidiary Guarantors and the REIT, as a limited guarantor, entered into a Forbearance Agreement with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of in excess of 50% of the aggregate principal amount of the Operating Partnership’s 5.95% senior unsecured notes due 2026. Pursuant to the 2026 Notes Forbearance Agreement, among other provisions, the 2026 Holders agreed to forbear from exercising any rights and remedies under the indenture governing the 2026 Notes solely with respect to the default resulting from the nonpayment of the $18.6 million interest payment that was due and payable on June 15, 2020, including the failure to pay the 2026 Notes Interest Payment by the end of the 30-day grace period. The forbearance period under the 2026 Notes Forbearance Agreement ended on the earlier of July 22, 2020 and the occurrence of any of the specified early termination events described therein.

On July 22, 2020, the parties to the 2026 Notes Forbearance Agreement entered into an Amendment to the 2026 Notes Forbearance Agreement to extend the forbearance period to the earlier of the Original Termination Date and the occurrence of any of the specified early termination events. The Amendment also provides for automatic extension of the 2026 Notes Forbearance Agreement by written notice to the Company representing that the 2026 Holders of at least 50.1% of the aggregate principal amount of the 2026 Notes have agreed to extend the forbearance period to the later date and time set forth in such notice.

(iii) Amendment to Forbearance Agreement with Respect to the Credit Agreement

As previously reported, on June 30, 2020, the Operating Partnership, the Subsidiary Guarantors and the REIT, as a limited guarantor, entered into a Forbearance Agreement with Wells Fargo Bank, National Association, as administrative agent for the lenders party to the Credit Agreement, dated as of Jan. 30, 2019. Pursuant to the Bank Forbearance Agreement, among other provisions, the Agent, on behalf of itself and the Lenders, agreed to forbear from exercising any rights and remedies under the Credit Agreement solely with respect to the Specified Defaults (as defined in the Bank Forbearance Agreement), including the cross-default resulting from the failure to pay the 2023 Notes Interest Payment or the 2026 Notes Interest Payment. The forbearance period under the Bank Forbearance Agreement ended on the earlier of July 15, 2020 and the occurrence of any of the specified early termination events.

As previously reported, on July 15, 2020, the parties to the Bank Forbearance Agreement entered into an Amendment to the Bank Forbearance Agreement to extend the forbearance period to the earlier of July 22, 2020 and the occurrence of any of the specified early termination events.

On July 22, 2020, the parties to the Bank Forbearance Agreement entered into the Second Amendment to the Bank Forbearance Agreement to further extend the forbearance period to the earlier of July 29, 2020 and the occurrence of any of the specified early termination events. The Second Bank Amendment also provides for automatic extension of the Bank Forbearance Agreement by written notice representing that the required percentage of Lenders under the Second Bank Amendment have agreed to extend the forbearance period to the later date and time set forth in such notice.

Negotiating Events of Defaults

As previously reported, the Company elected to not make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment and, as provided for in the indenture governing the 2023 Notes and the 2026 Notes, to enter the respective 30-day grace periods to make such payments. The Operating Partnership did not make either of the 2023 Notes Interest Payment or the 2026 Notes Interest Payment on the last day of the respective 30-day grace periods. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment is considered an “event of default” with respect to each of the 2023 Notes and the 2026 Notes, which results in a cross default under the Credit Agreement. While the events of default are continuing under the indenture, the Trustee or the holders of at least 25% in principal amount of the 2023 Notes may declare the 2023 Notes to be due and payable immediately and the Trustee or the holders of at least 25% in principal amount of the 2026 Notes may declare the 2026 Notes to be due and payable immediately. While the events of default are continuing under the Credit Agreement, the Agent may and shall upon the direction of the requisite lenders, declare the loans thereunder to be immediately due and payable. Further, if any of the 2023 Notes, the 2026 Notes or the Credit Agreement were accelerated, it would trigger an “event of default” under the Operating Partnership’s 4.60% senior unsecured notes due 2024, which could lead to the acceleration of all amounts due under those notes.

The Company is continuing to engage in negotiations and discussions with the holders and lenders of the Company’s indebtedness. There can be no assurance, however, that the Company will be able to negotiate acceptable terms or to reach any agreement with respect to its indebtedness.

About CBL & Associates

CBL & Associates Properties, Inc., and its subsidiaries are a self-managed, self-administered, fully integrated real estate investment trust (REIT). The Companies own, develop, acquire, lease, manage, and operate regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers, office and other properties.

CBL & Associates reported a net loss attributable to the company of $108.78 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the Company of $78.57 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $4.72 billion in total assets, $3.99 billion in total liabilities, $1.06 million in redeemable non-controlling interests, and total equity of $725.09 million.

* * *

As reported by the TCR on June 1, 2020, Moody’s Investors Service downgraded the ratings of CBL & Associates Limited Partnership, including the corporate family rating to Ca from Caa1. The rating downgrade reflects Moody’s expectation that CBL’s liquidity profile will erode rapidly in the next two quarters.

Leave a Reply

Your email address will not be published. Required fields are marked *