Washington Prime Group Inc. [NYSE: WPG] disclosed that along with its certain subsidiaries it has decided to seek Chapter 11 protection. The firm has filed petitions for assistance under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.
The firm sought Chapter 11 protection after completing a restructuring support agreement (the RSA) with creditors. The agreement is headed by SVPGlobal, which owns nearly 73% of the principal amount outstanding of the firm’s secured corporate debt and 67% of the principal amount outstanding of the firm’s unsecured notes.
It has been disclosed that RSA offers a debt reduction of the balance sheet of the firm by nearly $950 million through the equitization of unsecured notes and a $190 million paydown of the revolving credit of the firm and term loan facilities. Moreover, the RSA reflects a $325 million equity rights offering, fully backed by SVPGlobal, as Plan Sponsor, the profits of that will be applied to, among other things, the paydown of secured debt.
Furthermore, the firm has revealed that it will use Chapter 11 to execute an inclusive and consensual financial restructuring of the firm’s corporate-level debt. It will enable the firm to considerably deleverage its balance sheet and reinforce its business and operations which are continued.
In addition to this, Washington Prime Group has earned $100 million in new money debtor-in-possession financing from the Consenting Creditors to back everyday operations during the Chapter 11 process and guarantee that all business operations continue in the normal way without disruption.