Thu 02/11/2021 16:35 PM
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Washington Prime Group is working with Kirkland & Ellis as legal advisor and Guggenheim Securities as financial advisor to explore potential balance sheet transactions, according to sources. The shopping center REIT has a $23.2 million interest payment due Monday, Feb. 15, on its $720.9 million 6.45% unsecured notes due 2024. It had $115 million of liquidity as of Sept. 30, 2020, including $112 million of cash and $3 million of availability under its revolver due December 2021. Continue reading as our Americas Core Credit team analyzes the Washington Prime Group potential balance sheet transactions and Request a Trial for access to the linked documents as well as our analysis and reporting on hundreds of other stressed, distressed and performing credits.

An ad hoc group of unsecured noteholders represented by Morrison & Foerster as counsel and Houlihan Lokey as financial advisor entered into discussions with the company late last year about a potential debt-for-equity swap that did not materialize. The discussions, cleansed in December 2020, centered on converting $259.3 million of the unsecured notes into $175 million of preferred equity.

The proposed preferred equity issuing vehicle would have taken the form of a limited liability company in which a bankruptcy remote single-purpose subsidiary of WPG would be the managing member and common equityholder, and the existing bondholders who elect to acquire the preferred equity would be the holders of the preferred equity interest. The WPG single-purpose subsidiary would have meant that the 51% equity interest held by subsidiaries of WPG in four unconsolidated joint ventures with affiliates of O’Connor Capital Partners would have been contributed to the preferred equity issuing vehicle. The pricing on the proposed preferred equity was 9% cash plus 5.75% PIK.

In August 2020, Washington Prime entered into amendments to its three credit facilities that, among other changes, waived leverage covenants for the second and third quarters last year in exchange for a coupon boost and additional collateral. The company needs to comply with a $65 million minimum liquidity covenant, tested on a monthly basis, during the covenant modification period.

The unsecured notes last traded in size on Feb. 10 at 74.5, yielding 16.3%, according to TRACE.

Washington Prime Group, Kirkland & Ellis and Guggenheim Securities did not immediately respond to requests for comment.

--Harvard Zhang, Alexander Saeedy
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