Washington Prime seeks plan modifications; eyes Oct. 15 emergence

By Sarah Lizee

Olympia, Wash., Oct. 4 – Washington Prime Group Inc. is seeking court approval to implement some modifications to its confirmed Chapter 11 plan of reorganization, according to a motion filed Sunday with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said if the modifications are approved, they will facilitate consummation of the plan and the company’s emergence from Chapter 11 on or about Oct. 15.

The proposed modifications amend some plan definitions to authorize, but not direct, holders of the Weberstown term loan facility claims to elect to capitalize all or a portion of their pro rata share of the Weberstown cash pool in loans issued under the new term loan exit facility, in lieu of receiving their pro rata share of the Weberstown cash pool.

Prior to filing the motion, the company engaged in negotiations with the plan sponsor and informal lender group regarding the modifications. The plan sponsor and lender group hold 100% of the Weberstown term loan facility claims, over 75% of the revolving and term loan facilities claim, and will, upon the effective date, hold a majority of new common stock and over 75% of the principal amount of loans issued under the new term loan exit facility.

The company noted that the modifications do not alter the treatment of general unsecured claims or existing equity interests under the plan, and will not change the treatment of any claim without the consent of the holder.

As previously reported, the court confirmed an amended plan that includes a settlement with the official committee of equity security holders, which will ensure a successful reorganization of the debtors, and provides holders of existing equity interest with materially increased recoveries and certainty regarding their treatment.

Under the amended plan, the total amount of cash to be allocated to holders of existing equity interests for purposes of the equity cash pools will be increased to $55 million from $40 million, of which $35 million will be allocated to the preferred equity cash pool and $20 million will be allocated to the common equity cash pool.

The total amount of new common equity to be allocated to holders of existing equity interests for purposes of the equity pools will be increased to 9.125% from 6.125%, of which 6.0625% will be allocated to the preferred equity pool and 3.0625% to the common equity pool.

Holders of existing common equity interests may elect to receive new common equity in lieu of cash under the plan, in which case these holders will also have the right to participate in their pro rata share of $7.96 million of the $130 million allocated to the backstop parties in a $260 million equity rights offering if electing to receive a distribution from the common equity pool.

As a result of the settlement, holders of unsecured notes may receive slightly less new common equity under the plan as compared to what they were entitled to receive under the initial plan.

The plan contemplates a deleveraging of the company’s balance sheet by nearly $950 million through the equitization of unsecured notes and a $190 million paydown of the company’s revolving credit and term loan facilities.

It also contemplates a $325 million equity rights offering, fully backstopped by SVPGlobal, as plan sponsor, the proceeds of which will be applied to, among other things, the paydown of secured debt.

The agreement also provides for an effective four-year extension of the remaining credit facility debt, and payment in full of all claims held by vendors and service providers. A new revolving exit facility will be in the amount of up to $50 million, less the initial outstanding amount of any incremental term loans to be issued. The new term loan exit facility will be equal to $1.21 billion plus the elective exit loan amount.

Holders of revolving and term loan claims will receive their pro rata share of $1.19 million plus the elective exit loan amount attributable to the revolving and term loan facilities claims, if any, in principal amount of loans under the new term loan exit facility, and the revolving and term loan facilities cash pool, which is $150 million plus cash in the amount of certain additional accrued amounts.

Holders of Weberstown term loan facility claims will receive their pro rata share of $25 million, plus the elective exit loan amount attributable to the Weberstown term loan facility claims, if any, in principal amount of loans under the new term loan exit facility, and the Weberstown cash pool, which is $40 million plus cash in the amount of certain additional unpaid amounts.

Holders of unsecured notes claims will receive their pro rata share of 100% of new common equity, less any new common equity distributed to holders of existing equity interests under the equity options and subject to dilution on account of the management incentive plan, backstop equity premium, and the equity rights offering. They will also receive their pro rata share of the unsecured noteholder rights, which is the right to purchase their pro rata share of 50% of the new common equity offered in the equity rights offering.

Holders of priority-level mortgage guarantee claims will receive reinstatement or other treatment rendering their claims unimpaired.

Holders of general unsecured claims will receive payment in full in cash, reinstatement or other treatment that leaves their claims unimpaired.

Intercompany claims and intercompany interests will be reinstated, or discharged, canceled, released and extinguished with no distribution.

Section 510(b) claims will be canceled with no distribution.

The real estate investment trust is based in Columbus, Ohio. The company filed bankruptcy on June 13 under Chapter 11 case number 21-31948.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.