Washington Prime Group prepares potential bankruptcy filing; shares sink 44%

Washington

MALL owner Washington Prime Group is preparing a potential bankruptcy filing as time runs out to avert a default after it skipped an interest payment on its debt, according to people with knowledge of the plans.

The real estate investment trust (Reit), which owns about 100 malls throughout the US, said last month that it would use a 30-day grace period to continue negotiations with its lenders. Yet those talks are faltering, said the sources, who asked not to be named discussing confidential preparations.

The plan to file for Chapter 11 protection is not final and could change if negotiations evolve or the company's grace period is extended, the sources added. A representative for Washington Prime declined to comment.

Shares of Washington Prime sank as much as 44 per cent to US$3.50 after Bloomberg reported the potential filing, triggering three trading halts.

Columbus, Ohio-based Washington Prime has said the impact from the Covid-19 pandemic could affect its ability to comply with debt covenants and continue operations, or remain a going concern "under certain circumstances".

It said in November that it was "actively negotiating" with debt holders to cut borrowings.

In December, it failed to reach an agreement with debt holders. BLOOMBERG