Mall Landlord CBL Turns to Moelis, Weil for Restructuring

(Bloomberg) -- CBL & Associates Properties Inc. hired Moelis & Co. and Weil Gotshal & Manges as it seeks advice on strategic and financing options including restructuring, according to people with knowledge of the matter.

The owner of shopping malls is exploring ways to recapitalize including an exchange offer, in which senior holders of unsecured debt swap their investments for secured debt, said one of the people, who requested anonymity because the matter is private. The Chattanooga, Tennessee-based company may also discuss a Chapter 11 bankruptcy filing as a last resort, some of the people said.

A group of CBL’s creditors has hired advisers including PJT Partners Inc. and Akin Gump Strauss Hauer & Feld, some of the people said. Calls for comment to CBL, Weil and Akin weren’t immediately returned. Representatives for Moelis and PJT declined to comment.

The real estate investment trust’s shares fell as much as 11% Tuesday morning. They have dropped 68% this year, cutting the company’s market capitalization to $63 million.

CBL operates more than 100 properties across 26 states, most of which are so-called Class B malls, and has been hurt in part by the closures of retailers including Forever 21. Its top tenants based on revenue at year-end included L Brands Inc., Signet Jewelers Ltd., Foot Locker Inc., a unit of American Eagle Outfitters Inc., Dick’s Sporting Goods Inc. and Ascena Retail Group Inc., filings show.

CBL said this month that it was taking actions to offset the anticipated impacts of the Covid-19 pandemic on revenue and cash flow. Chairman Charles Lebovitz, Chief Executive Officer Stephen Lebovitz, President Michael Lebovitz and independent directors agreed to reduce their salaries and fees by 50%.

The company, which is scheduled to report first-quarter results on May 4, has withdrawn 2020 earnings guidance and discontinued its dividend. Fitch downgraded the company’s long-term rating and said it expects “that an event of default or an exchange/restructuring of existing debt is probable within 12 months.”

CBL’s bonds maturing in 2026 last traded at about 26 cents on the dollar, according to data from Trace.

©2020 Bloomberg L.P.

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