(Reuters) - Mall owner Washington Prime Group filed for chapter 11 bankruptcy protection on Sunday after the COVID-19 pandemic forced it to temporarily close some of its roughly 100 shopping centers across the United States and businesses were unable to pay it rent.
The company's estimated assets ranged from $1 billion to $10 billion as did its estimated liabilities, according to a filing made in the United States Bankruptcy Court for the Southern (NYSE:SO) District of Texas.
Reuters earlier reported that the Columbus, Ohio-based company, formed in 2014 following a spin-off from mall giant Simon Property Group Inc (NYSE:SPG), was preparing to seek bankruptcy protection as soon as this week.
The company said it has secured $100 million of so-called debtor-in-possession financing to aid operations during bankruptcy proceedings, adding it entered a restructuring support agreement with creditors led by SVPGlobal.
The agreement provides for a deleveraging of the company's balance sheet by nearly $950 million, Washington Prime said on Sunday. The agreement contemplates a $325 million equity rights offering, according to the company.
Fallout from the pandemic last year forced Washington Prime to close some properties for a time and relax collection of rent from its tenants, squeezing the mall owner's finances.
During the throes of the pandemic in 2020, Washington Prime's rental income plummeted about $127 million from 2019 levels due to the coronavirus outbreak.
During the first three months of this year, Washington Prime's rental income was off roughly $20 million compared with the same time in 2020. Its cash flows from operations for the three months ending in March were $3.3 million, a plunge from $10 million during the same time in 2020.
The U.S. economy is now sharply rebounding with more than 140 million Americans fully vaccinated and businesses reopening.
Nevertheless, previous government stay-at-home orders and business closures designed to slow the pandemic crushed many retailers' bottom lines, imperiling their ability to pay rent to landlords such as Washington Prime.
Other mall owners such as CBL & Associates Properties Inc and Pennsylvania Real Estate Investment Trust filed for bankruptcy last year.