A month after filing for Chapter 11 bankruptcy protection, the U.S. Bankruptcy Court for the District of Delaware approved a pre-packaged restructuring plan for Pennsylvania Real Estate Investment Trust on Monday.
The Philadelphia company expects to emerge from bankruptcy in early December, later than its initial expectation to be done with the proceedings by the end of November.
PREIT (NYSE: PEI) is hopeful the reorganization will give it more time and money to become a stronger company. Under the plan, the shopping mall owner will have access to $130 million in new financing as it relates to a senior unsecured facility and the elimination of a $20 million revolving facility designated for repaying mortgages.
The company also said that as part of the reorganization, its debt maturity schedule will be extended by three years.
None of these proposals are final until the agreements are executed and the company emerges from bankruptcy.
“We look forward to emerging from this process as a stronger, more innovative platform for our business partners,” said Joseph F. Coradino, CEO of PREIT, in a statement. “We were able to reach this outcome on an expedited basis thanks to the overwhelming support of our lenders, as well as the continued support of our employees, customers, tenants and vendors.”
The Philadelphia owner of malls including Plymouth Meeting Mall, Cherry Hill Mall and Fashion District Philadelphia, will come out of bankruptcy in an environment that remains challenging for retailers and their landlords.
Traffic to physical stores on Thanksgiving Day and Black Friday declined by 52.1% compared with 2019, according to Sensormatic Solutions, a retail research company. The drop can be attributed to several issues including the pandemic and shoppers hesitant about being in brick-and-mortar stores, several retailers that closed for the holiday and a continued shift to online buying.
PREIT voluntarily filed Nov. 1 for Chapter 11 bankruptcy protection after Strategic Value Partners, which owns 5% of PREIT’s debt, objected to a restructuring plan that 95% of PREIT’s other lenders approved. Strategic Value Partners finally relented and approved the pre-packaged plan.
PREIT continued to operate its malls during bankruptcy. When it filed bankruptcy, PREIT listed as having $2.4 billion in assets and total debt of just over $2 billion. Of its debt, $913 million is an unsecured loan it has with Wells Fargo, which is its largest creditor.
The company’s stock has made gains in the last week and closed Monday at $1.10 a share. The stock soared in after-hours trading Monday by nearly 24% on news of the bankruptcy approval.
Its 52-week low was 36 cents a share.
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