Cbl & Associates Properties Inc 8-K, filed Nov 2, 2020
Cbl & Associates Properties Inc (CBL)
About this 8-K
Cbl & Associates Properties Inc filed this 8-K on November 2, 2020, reporting on events of October 29, 2020.
Items reported
- Item 1.03: Bankruptcy or receivership
- Item 2.04: Debt obligation accelerated or increased
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
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(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered under Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 1.03 Bankruptcy or Receivership
On November 1, 2020, CBL & Associates Properties, Inc. (the “REIT”), CBL & Associates Limited Partnership (the “Operating Partnership”), the majority owned subsidiary of the REIT (collectively, the Operating Partnership and the REIT are referred to as the “Company”), and certain of its direct and indirect subsidiaries filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Company has requested that the Bankruptcy Court administer the Chapter 11 Cases jointly under the caption In re CBL & Associates Properties, Inc., et al.
The Company filed motions with the Bankruptcy Court seeking authorization to continue to operate its business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To ensure its ability to continue operating in the ordinary course of business, the Company has also filed with the Bankruptcy Court a variety of first day motions seeking “first day” relief, including requesting authority to pay employee wages and benefits and certain vendors and suppliers in the ordinary course of business.
The Company is continuing to operate in accordance with the terms of the Restructuring Structuring Agreement, dated as of August 18, 2020, by and between the Company and certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners (the “Consenting Noteholders”) in excess of 62% (including joinders) of the aggregate principal amount of the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”), 4.60% senior unsecured notes due 2024 (the “2024 Notes”) and 5.95% senior unsecured notes due 2026 (the “2026 Notes,” together with the 2023 Notes and the 2024 Notes, the “Notes”), as previously disclosed in the Company’s Current Report on Form 8-K filed on August 19, 2020 (the “August 19 Form 8-K”).
ITEM 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Chapter 11 Accelerations
The commencement of the Chapter 11 Cases constituted an event of default or termination event, and caused the automatic and immediate acceleration of all debt outstanding under or in respect of a number of instruments and agreements (the “Debt Instruments”) relating to direct financial obligations of the Debtors or certain of the Debtors’ subsidiaries (the “Accelerated Direct Financial Obligations”). The material Accelerated Debt Financial Obligations include:
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Indenture (as amended and supplemented, the “Indenture”), dated as of November 26, 2013, among the Operating Partnership, as issuer, the REIT, as limited guarantor and Delaware Trust Company (as successor to U.S. Bank National Association) as trustee (the “Trustee”), as amended, modified or supplemented by that certain First Supplemental Indenture, dated as of November 26, 2013 by and among the Issuer, the REIT and the Trustee, the Second Supplemental Indenture, dated as of December 13, 2016, by and among the Issuer, the REIT and the Trustee and the Third Supplemental Indenture dated as of January 30, 2019, by and among the Issuer, the REIT, the Trustee and certain subsidiary guarantors (the “Subsidiary Guarantors”) pursuant to which an aggregate of $1,375 million of the Operating Partnership’s Notes are outstanding. |
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Credit Agreement, dated as of January 30, 2019, by and among the Company, Wells Fargo Bank, National Association, as administrative agent (the “Agent’) for the lenders (the “Lenders”) party thereto (as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, the “Credit Agreement’), pursuant to which the Company has $439 million outstanding under the term loan thereunder and $676 million outstanding under the revolver thereunder. |
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Certain property level debt of the subsidiaries of Debtor equaling an aggregate outstanding principal amount of approximately $800 million to $850 million. |
The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable without notice from the lenders thereunder. Any efforts to enforce such payment obligations due under the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
Credit Agreement Alleged Default
As previously disclosed, on each of May 26, 2020, June 2, 2020, June 16, 2020 and August 6, 2020, the Operating Partnership received notices of default and reservation of rights letters (the “Original Notices and Letters”) from the Agent, which asserted that certain defaults and events of default occurred and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants in the Credit Agreement and resulting from the failure to make the $11.8 million interest payment that was due and payable on June 1, 2020, to holders of the 2023 Notes and the $18.6 million interest payment that was due and payable on June 15, 2020 to holders of the Operating Partnership’s 2026
Notes, prior to the expiration of the applicable grace periods. In addition, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the Agent, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base loans at the expiration of the applicable interest periods and (ii) sought payment of approximately $4.8 million related thereto for April through June 2020 (the “Demand Interest”). As previously disclosed, on August 19, 2020, the Operating Partnership received, (i) a notice of default and reservation of rights letter (the “August Notice and Letters”) from the Agent, which asserted that each of the failure to pay the Demand Interest and the entry into the RSA constituted events of default under the Credit Agreement and (ii) a notice of acceleration (the “Notice of Acceleration”) of obligations under the Credit Agreement from the Agent based on the events of default previously asserted by the Agent, pursuant to which, the Agent declared the $1.123 billion principal amount of the loans together with interest accruing at the base rate and the post-default rate, which as previously disclosed are rates being disputed by the Company, $1.3 million of outstanding letters of credit and all other obligations under the Credit Agreement to be immediately due and payable. As previously disclosed, in addition, the Agent also terminated the revolving and swingline commitments and the obligation to issue letters of credit under the Credit Agreement and instructed the Operating Partnership to deliver approximately $1.3 million to cash collateralize outstanding letters of credit.
On October 16, 2020, the Company received an additional notice of default and reservation of rights letter from the Agent which asserted that certain defaults exist and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants in the Credit Agreement and resulting from the failure to make the $6.9 million interest payment that was due and payable on October 15, 2020, to holders of the 2024 Notes and that such default will constitute an event of default under the Credit Agreement if such interest is not paid within the 30-day grace period (together with the Original Notices and Letters and the August Notice and Letter, the “Notices and Letters”). On October 28, 2020, the Company received (i) a Notice of Exercise of Remedies under that certain Collateral Agreement, dated as of January 30, 2019 (the “Collateral Agreement”) and that certain Pledge Agreement, dated as of January 30, 2019 (the “Notice of Exercise”), pursuant to which the Agent and Lenders notified the Company of their election to exercise the rights reserved pursuant to the Agent Notices and Letters and (ii) a Revocation of License to Collect Rents, pursuant to which the Agent, on behalf of the Lenders, revoked the revocable license to collect rents (“Rents”) payable by tenants at properties encumbered by mortgages and deeds of trust that secure the Credit Agreement, thus requiring such Rents to be paid directly to the Agent. Pursuant to the Notice of Exercise, effective immediately, the Agent, on behalf of the Lenders, elected to exercise all voting rights and other ownership rights in respect of all of the equity interests in certain subsidiaries of the pledgors under the Pledge Agreement and all Collateral (as defined in the Credit Agreement) owned by each pledger or grantor, as applicable, under the Pledge Agreement and the Collateral Agreement, as applicable.
Notwithstanding these actions by the Agent, the Company intends to continue to operate its business, retain legal ownership of the entities pledged under the Collateral Agreement and the Pledge Agreement and manage its properties. The Company contends that the actions taken by the Agent are unauthorized and unlawful and the Company continues to disagree with the assertions made by the Agent as to the basis for the Notice of Acceleration and the Notice of Exercise and, accordingly, the validity of the Notice of Acceleration and the Notice of Exercise. The Company is vigorously defending against the claims made by the Agent and the Lenders. Among other things, the Company, in good faith, disputes that any breaches of the Credit Agreement or any events of default (the “Events of Default”) thereunder have occurred and are continuing. On November 2, 2020, the Company filed an adversary proceeding in the United States Bankruptcy Court for the Southern District of Texas seeking among other things, a Temporary Restraining Order (the “Order”) and for a Preliminary Injunction to enjoin, pending a determination of the parties’ rights, the Agent or any of its officers, agents, servants, attorneys and successors from taking any action to exercise any and all remedies under the Credit Agreement or other agreements as a result of the Events of Default asserted by the Agent pursuant to the Agent Notices and Letters, or any other right or remedy that would otherwise accompany the occurrence of an Event of Default, including without limitation, any rights of acceleration under the Credit Agreement, rights flowing from the Notice of Acceleration, right exercised pursuant to the Notice of Exercise or any other rights or remedies properly exercisable solely upon an actual or determined Event of Default.
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Effective October 29, 2020, and after further consultation and review with the Company’s compensation consultant, FPL Associates (“FPL”) and the Company’s legal advisors, the Compensation Committee and Board of Directors of the Company (the “Board”) jointly approved the following changes to the terms of the Key Employee Retention Plan (“KERP”) as previously approved and described in the August 19 Form 8-K, with regard to the Company’s Named Executive Officers (“NEOs”):
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Payable to each NEO effective as of October 29, 2020, so long as the Restructuring Support Agreement (“RSA”) entered on August 18, 2020 is in effect. |
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Bonus payment to be returned to the Company if the executive voluntarily resigns or is terminated for Cause (as defined in the Retention Bonus Agreement) on or before September 27, 2021. |
All other terms of the KERP remain in effect as described in the August 19 Form 8-K. In connection with approval of these actions, the Compensation Committee of the Company and Board also reconfirmed their decision that annual base salaries for the NEOs for 2021 would remain at the same levels originally set for 2020 as reported in the Company’s 2020 proxy statement filed with the SEC on April 6, 2020.
The preceding summary description of changes to the terms of the KERP under Retention Bonus Agreements applicable to the Company’s NEOs is not complete, and is qualified in its entirety by reference to the Forms of Amended and Restated Retention Bonus Agreements which are filed as Exhibits 10.1 and 10.2 hereto.
ITEM 7.01 Regulation FD Disclosure
Cleansing Material
Beginning on October 13, 2020, the Company engaged in confidential discussions and negotiations under separate Confidentiality Agreements (the “NDAs”) with certain Consenting Noteholders (the “Ad Hoc Group”) regarding potential strategic transactions to enhance the Company’s capital structure. As part of such discussions and negotiations, the Company’s management also made a presentation to the Ad Hoc Group in October of 2020 (the “Presentation”).
Pursuant to the NDAs, the Company agreed to publicly disclose certain information (the “Cleansing Material”) upon the occurrence of certain events set forth in the NDAs. The Cleansing Material was prepared solely to facilitate a discussion with the parties to the NDAs and was not prepared with a view toward public disclosure and should not be relied upon to make an investment decision with respect to the Company. The Cleansing Material should not be regarded as an indication that the Company or any third party consider the Cleansing Material to be a reliable prediction of future events, and the Cleansing Material should not be relied upon as such. Neither the Company nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Material or undertakes any obligation to publicly update the Cleansing Material to reflect circumstances existing after the date when the Cleansing Material was prepared or conveyed or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Cleansing Material are shown to be in error. In the event any transaction occurs in the future, the terms of any such transaction may be materially different than the terms set forth in the Confidential Information. However, no assurance can be given that any such transaction will occur at all.
Concurrently with such discussions with the Consenting Noteholders, the Company was also engaged in confidential discussions and negotiations with the Agent to try to reach a mutual agreement between the Company, the Ad Hoc Group and the Lenders. As part of such discussions and negotiations, on September 3, 2020, the Agent made a proposal (the “Wells Proposal”) to the Company on behalf of the Lenders. On October 25, 2020, while indicating that it remained committed to the terms agreed in the RSA, the Ad Hoc Group submitted a revised proposal to the Company on behalf of the Consenting Noteholders (the “Bond Proposal”). On October 26, 2020, the Company’s advisors discussed the Bond Proposal with the advisors for the Ad Hoc Group. On October 27, 2020, the Ad Hoc Group sent the Bond Proposal to the Agent.
The foregoing description of the Cleansing Material does not purport to be complete and is qualified in its entirety by reference to the complete presentation of the Presentation, the Wells Proposal and the Bond Proposal attached as Exhibits 99.1, 99.2 and 99.3 hereto.
Press Release
Attached as Exhibit 99.4 to this Current Report on Form 8-K, is a copy of the Company’s press release, dated November 2, 2020, announcing its filing of the Chapter 11 Cases. Additional information about the Chapter 11 Cases is available at https://www.cblproperties.com/restructuring.
The information disclosed in this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing.
ITEM 8.01. Other Events
The Company cautions that trading in the Company’s securities during the pendency of the anticipated Chapter 11 proceedings is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in the Chapter 11 Cases.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this filing that address activities, events or developments that the Company expects, believes, targets or anticipates will or may occur in the future are forward-looking statements. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors, which could include the following: risks and uncertainties relating to the Chapter 11 Cases, including but not limited to, the Company’s ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Cases; the effects of the Chapter 11 Cases on the Company and on the interests of various constituents; the length of time the Company will operate under the Chapter 11 Cases; the potential adverse effects of the Chapter 11 Cases on the Company’s liquidity or results of operations and increased legal and other professional costs necessary to execute the Company’s financial restructuring; the Company’s trading price and the volatility of the Company’s common stock and the effects of the Chapter 11 Cases on the Company’s continued listing on the New York Stock Exchange; and the effects and the length of the 2019 novel coronavirus (COVID-19) pandemic as well as other risk factors set forth in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including any amendments to those reports) filed with the Securities and Exchange Commission. The Company therefore cautions readers against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
ITEM 9.01 Financial Statements and Exhibits
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Exhibits |
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Description |
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Form of Amended and Restated Retention Bonus Agreement for the Chairman of the Board. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CBL & ASSOCIATES PROPERTIES, INC. |
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/s/ Farzana Khaleel |
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Farzana Khaleel |
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Executive Vice President - |
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Chief Financial Officer and Treasurer |
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CBL & ASSOCIATES LIMITED PARTNERSHIP |
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By: CBL HOLDINGS I, INC., its general partner |
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/s/ Farzana Khaleel |
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Farzana Khaleel |
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Executive Vice President - |
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Chief Financial Officer and Treasurer |
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Date: November 2, 2020 |
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Exhibit 10.1
FORM – CHARLES B. LEBOVITZ
AMENDED AND RESTATED RETENTION BONUS AGREEMENT
THIS AMENDED AND RESTATED RETENTION BONUS AGREEMENT (the “Agreement”) is entered into this 29th day of October, 2020 (the “Effective Date”), by and between CHARLES B. LEBOVITZ (“Executive”) and CBL & ASSOCIATES MANAGEMENT, INC., a Delaware corporation (together with its successors and assigns permitted under this Agreement, the “Company”). Executive is employed by CBL & Associates Management, Inc. which is an affiliate of CBL & Associates Properties, Inc., a Delaware corporation (“CBL/REIT”), and, as such, references herein to the “Company”, where the context requires, will include the CBL/REIT.
WHEREAS, Executive and the Company previously entered into that certain Retention Bonus Agreement, dated as of August 18, 2020 (the “Prior Agreement”);
WHEREAS, Executive and the Company desire to amend and restate the Prior Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive hereby agree as follows:
1.Retention Bonus. Executive is eligible to receive a retention bonus in the amount of Four Hundred Fourteen Thousand and 0/100 Dollars ($414,000.00) (the “Retention Bonus”), subject to the terms of this Agreement. The Retention Bonus will be paid to Executive in one payment, less all required withholdings, on October 29, 2020 provided that the Restructuring Support Agreement, dated as of August 18, 2020 (the “RSA”), by and among the Company and the Consenting Noteholders (as defined in the RSA) has not been terminated. Executive’s right to the Retention Bonus is subject to Executive’s continued employment (except as may be provided in Section 3(b) below) for the Retention Period defined below. By acceptance of this Agreement, Executive agrees that the Retention Bonus is in lieu of any annual cash incentive bonus and any equity incentive bonus awards that otherwise may be payable to Executive in respect of the Company’s 2020 fiscal year
2.Retention Period. The Retention Period is for the period commencing on the Effective Date and terminating on September 27, 2021 (the “Retention Period”).
3.Termination of Employment. (a) If, prior to the end of the Retention Period, (i) Executive voluntarily terminates Executive’s employment with the Company or (ii) Executive’s employment is terminated by the Company for Cause (as defined below), at the Company’s discretion, Executive will be required to repay to the Company the Retention Bonus.
(b) If Executive’s employment is terminated due to death or disability or by the Company other than for Cause, Executive will be entitled to be paid the Retention Bonus and will not be required to repay the Retention Bonus.
(c) For purposes hereof, the term “disability” refers to Executive’s complete and permanent disability as defined by the Company’s health insurance plans or as otherwise defined by the
Company from time to time. Executive acknowledges and agrees that the determination of disability shall be within the sole, absolute and exclusive discretion of the Company. For purposes of this Agreement, “Cause” shall mean (i) any act of fraud or willful malfeasance committed by Executive; (ii) Executive’s willful engagement in conduct which is injurious to the Company or any of its affiliates, monetarily or otherwise if, after written notice by the Board or the Compensation Committee to Executive stating, with specificity, the alleged conduct and providing direction and a reasonable opportunity for Executive to address and/or cure any such alleged conduct, Executive then intentionally fails to address or exert reasonable efforts to cure such alleged conduct within ninety (90) days following Executive’s receipt of such written notice; (iii) Executive’s willful failure to perform Executive’s material duties if, after written notice by the Board or the Compensation Committee to Executive stating, with specificity, the duties Executive has failed to perform and providing direction and a reasonable opportunity for Executive to address and/or cure any such alleged failures, Executive then intentionally fails to address or exert reasonable efforts to cure alleged failures within ninety (90) days following Executive’s receipt of such written notice; (iv) Executive’s conviction of, or a plea of guilty or no contest to, any criminal offence involving fraud, misappropriation or moral turpitude; or (v) Executive’s willful engagement in conduct in violation of the Company’s policies and procedures including, but not limited to, the Company’s Third Amended and Restated Code of Business Conduct and Ethics dated August 9, 2018 as may be further amended.
4.Repayment of Retention Bonus. Under circumstances where the Retention Bonus is subject to repayment pursuant to Section 3 hereof, the Retention Bonus must be repaid by Executive to the Company within fifteen (15) days following written notice from the Company.
5.Section 409A. The payments and benefits under this Agreement are intended to be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
6.Entire Agreement. This Agreement sets forth the entire understanding of the Company and Executive regarding the subject matter hereof and supersedes all prior agreements, understandings and inducements, whether express or implied, oral or written, relating to the subject matter hereof. No modification or amendment of this Agreement shall be effective without a prior written agreement signed by Executive and the Company. The Company and Executive hereby agree and acknowledge that the certain Employment Agreement between the Company and Executive dated November 3, 1993 is hereby terminated and of no further force and effect. The Prior Agreement is hereby terminated and of no further force and effect.
7.Confidentiality. Executive hereby agrees, to the maximum extent permitted by law, to, and cause Executive’s affiliates and representatives to, keep confidential the existence and the terms of this Agreement; provided, however, that (i) Executive may disclose the terms of this Agreement to Executive’s financial or legal advisors who reasonably need to have access to such information to provide services to Executive; provided, further that Executive has made such advisors aware of the confidential nature of such information prior to disclosure, and (ii) Executive may disclose the terms of this Agreement if required to do so by any applicable legal requirement so long as reasonable prior notice of such required disclosure is given to the Company.
8.Governing Law; Waiver of Jury Trial. This Agreement is governed by and is to be construed in accordance with the internal laws of the State of Tennessee. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any action or proceeding arising out of or relating to this Agreement.
9.Tax. Amounts payable under this Agreement shall be subject to withholding for all federal, state and local income and employment taxes as shall be required to be withheld pursuant to any applicable law or regulation.
10.No Employment Agreement; No Enlargement of Employee Rights. This Agreement is not an employment agreement. Nothing in this Agreement shall be construed to confer upon Executive any right to continued employment.
11.Notices. Any notice provided for in this Agreement (“Notice(s)”) shall be in writing and shall be delivered in accordance with and the Notice provision set forth in the Employment Agreement.
12.Counterpart Execution.This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and together constitute one and the same instrument. To facilitate execution of this Agreement, the parties may exchange counterparts of the signature page by facsimile or electronic mail (e-mail), including, but not limited to, as an attachment in portable document format (PDF), which shall be effective as original signature pages for all purposes.
13.Liquidated Damages.In the event the Company does not pay Executive the Retention Bonus in accordance with the terms of this Agreement, the Company agrees to pay liquidated damages to Executive in an amount equal to the Retention Bonus.
In witness hereof, the Company and Executive have executed this Agreement to be effective as of the date first above written.
CBL & ASSOCIATES MANAGEMENT, INC.
By:________________________________
Name:
Title:
______________________________
Executive Name: Charles B. Lebovitz
Exhibit 10.2
FORM OF AGREEMENT – TIER ONE EXECS OTHER THAN CHARLES LEBOVITZ
AMENDED AND RESTATED RETENTION BONUS AGREEMENT
THIS AMENDED AND RESTATED RETENTION BONUS AGREEMENT (the “Agreement”) is entered into this 29th day of October, 2020 (the “Effective Date”), by and between [ ] (“Executive”) and CBL & ASSOCIATES MANAGEMENT, INC., a Delaware corporation (together with its successors and assigns permitted under this Agreement, the “Company”). Executive is employed by CBL & Associates Management, Inc. which is an affiliate of CBL & Associates Properties, Inc., a Delaware corporation. Executive has entered into that certain Employment Agreement with the Company, dated August 18, 2020 (the “Employment Agreement”).
WHEREAS, Executive and the Company previously entered into that certain Retention Bonus Agreement, dated as of August 18, 2020 (the “Prior Agreement”);
WHEREAS, Executive and the Company desire to amend and restate the Prior Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive hereby agree as follows:
1.Retention Bonus. Executive is eligible to receive a retention bonus in the amount of ________________________ Thousand and 0/100 Dollars ($________.00) (the “Retention Bonus”), subject to the terms of this Agreement. The Retention Bonus will be paid to Executive in one payment, less all required withholdings, on October 29, 2020 provided that the Restructuring Support Agreement, dated as of August 18, 2020 (the “RSA”), by and among the Company and the Consenting Noteholders (as defined in the RSA) has not been terminated. Executive’s right to the Retention Bonus is subject to Executive’s continued employment (except as may be provided in Section 3(b) below) for the Retention Period defined below. By acceptance of this Agreement, Executive agrees that the Retention Bonus is in lieu of any annual cash incentive bonus and any equity incentive bonus awards that otherwise may be payable to Executive in respect of the Company’s 2020 fiscal year.
2.Retention Period. The Retention Period is for the period commencing on the Effective Date and terminating on September 27, 2021 (the “Retention Period”).
3.Termination of Employment. (a) If, prior to the end of the Retention Period, (i) Executive voluntarily terminates Executive’s employment with the Company or (ii) Executive’s employment is terminated by the Company for Cause (as defined below), at the Company’s discretion, Executive will be required to repay to the Company the Retention Bonus.
(b) If Executive’s employment is terminated due to death or disability or by the Company other than for Cause, Executive will be entitled to be paid the Retention Bonus and will not be required to repay the Retention Bonus.
(c) For purposes hereof, the term “disability” refers to Executive’s complete and permanent disability as defined by the Company’s health insurance plans or as otherwise defined by the
Company from time to time. Executive acknowledges and agrees that the determination of disability shall be within the sole, absolute and exclusive discretion of the Company. “Cause” shall mean (i) any act of fraud or willful malfeasance committed by Executive; (ii) Executive’s willful engagement in conduct which is injurious to the Company or any of its affiliates, monetarily or otherwise if, after written notice by the Board or the Compensation Committee to Executive stating, with specificity, the alleged conduct and providing direction and a reasonable opportunity for Executive to address and/or cure any such alleged conduct, Executive then intentionally fails to address or exert reasonable efforts to cure such alleged conduct within ninety (90) days following Executive’s receipt of such written notice; (iii) Executive’s willful failure to perform Executive’s material duties under the Employment Agreement if, after written notice by the Board or the Compensation Committee to Executive stating, with specificity, the duties Executive has failed to perform and providing direction and a reasonable opportunity for Executive to address and/or cure any such alleged failures, Executive then intentionally fails to address or exert reasonable efforts to cure alleged failures within ninety (90) days following Executive’s receipt of such written notice; (iv) Executive’s conviction of, or a plea of guilty or no contest to, any criminal offence involving fraud, misappropriation or moral turpitude; or (v) Executive’s willful engagement in conduct in violation of the Company’s policies and procedures including, but not limited to, the Company’s Third Amended and Restated Code of Business Conduct and Ethics dated August 9, 2018 as may be further amended.
4.Repayment of Retention Bonus. Under circumstances where the Retention Bonus is subject to repayment pursuant to Section 3 hereof, the Retention Bonus must be repaid by Executive to the Company within fifteen (15) days following written notice from the Company.
5.Section 409A. The payments and benefits under this Agreement are intended to be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
6.Entire Agreement. This Agreement sets forth the entire understanding of the Company and Executive regarding the subject matter hereof and supersedes all prior agreements, understandings and inducements, whether express or implied, oral or written, relating to the subject matter hereof. No modification or amendment of this Agreement shall be effective without a prior written agreement signed by Executive and the Company. The Prior Agreement is hereby terminated and of no further force and effect.
7.Confidentiality. Executive hereby agrees, to the maximum extent permitted by law, to, and cause Executive’s affiliates and representatives to, keep confidential the existence and the terms of this Agreement; provided, however, that (i) Executive may disclose the terms of this Agreement to Executive’s financial or legal advisors who reasonably need to have access to such information to provide services to Executive; provided, further that Executive has made such advisors aware of the confidential nature of such information prior to disclosure, and (ii) Executive may disclose the terms of this Agreement if required to do so by any applicable legal requirement so long as reasonable prior notice of such required disclosure is given to the Company.
8.Governing Law; Waiver of Jury Trial. This Agreement is governed by and is to be construed in accordance with the internal laws of the State of Tennessee. Each of the parties
2
hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any action or proceeding arising out of or relating to this Agreement.
9.Tax. Amounts payable under this Agreement shall be subject to withholding for all federal, state and local income and employment taxes as shall be required to be withheld pursuant to any applicable law or regulation.
10.No Employment Agreement; No Enlargement of Employee Rights. This Agreement is not an employment agreement. Nothing in this Agreement shall be construed to confer upon Executive any right to continued employment.
11.Notices. Any notice provided for in this Agreement (“Notice(s)”) shall be in writing and shall be delivered in accordance with and the Notice provision set forth in the Employment Agreement.
12.Counterpart Execution.This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and together constitute one and the same instrument. To facilitate execution of this Agreement, the parties may exchange counterparts of the signature page by facsimile or electronic mail (e-mail), including, but not limited to, as an attachment in portable document format (PDF), which shall be effective as original signature pages for all purposes.
13.Liquidated Damages.In the event the Company does not pay Executive the Retention Bonus in accordance with the terms of this Agreement, the Company agrees to pay liquidated damages to Executive in an amount equal to the Retention Bonus.
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In witness hereof, the Company and Executive have executed this Agreement to be effective as of the date first above written.
CBL & ASSOCIATES MANAGEMENT, INC.
By:________________________________
Name:
Title:
______________________________
Executive Name:
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Presentation to the Ad Hoc Group October 2020 Exhibit 99.1
Safe Harbor Statement While the information contained in this presentation is provided in good faith, neither CBL & Associates Properties Inc. (together with its subsidiaries and affiliates, “CBL”, of the “Company”) nor any of its advisers, representatives, officers, agents or employees makes any representation, warranty or undertaking, express or implied, with respect to this presentation and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of this presentation. The information contained in this presentation is as of the date hereof, and CBL and any of its affiliates each expressly disclaim any obligation to update the information herein presented or to correct any inaccuracies in this presentation that may become apparent. You should conduct your own investigation into any information contained in this presentation. The information included herein contains "forward-looking statements" within the meaning of section 27a of the securities act of 1933, as amended, and section 21e of the securities exchange act of 1934. All statements, other than statements of historical facts, included or incorporated by reference in this presentation that address ongoing or projected activities, events or trends that the company expects, believes, anticipates or assumes will or may occur in the future, including such matters as future operating results, capital expenditures, development or redevelopment projects, distributions, financings or refinancings, acquisitions or dispositions (including the timing, amount and nature thereof), tenant leasing, performance and results of operations, trends of the real estate industry or markets generally, and company business strategies and other matters of such nature are forward-looking statements. Such statements are based on expectations, beliefs, anticipations or assumptions which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Prospective investors are cautioned that any such statements or projections are not guarantees of future performance and that future events and actual events, financial and otherwise, may differ materially from the events and results discussed in forward-looking statements or projections. The company has no obligation, and makes no undertaking, to publicly update or revise any forward-looking statements or projections. The reader is directed to the company's various filings with the securities and exchange commission, including without limitation the company's most recent earnings release and supplemental financial schedules filed on form 8-k, the company's annual report on form 10-k and quarterly report on form 10-q and the "management's discussion and analysis of financial condition and results of operations" included therein, for a discussion of such risks and uncertainties.
Safe Harbor Statement This presentation is for informational purposes only, does not constitute, and shall not be interpreted as an offer, the solicitation of an offer or sale, or as the basis of a contract, and should not be construed as financial, legal, tax, accounting, investment or other advice or a recommendation with respect to any investment. This presentation shall not be taken as any form of commitment on the part of CBL to proceed with any transaction and is not intended to be relied upon as the basis for an investment decision in any securities issued by CBL or any other security. Securities may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an exemption from such registration. You agree that you are not entitled to, and will not, rely on the accuracy or completeness of this presentation, and that you will only be entitled to rely on such representations and warranties as may be included in any definitive agreement with respect to a transaction, when, as and if executed and delivered, and subject to such limitations and restrictions as may be contained therein. This presentation includes certain non-GAAP financial measures, which should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. This presentation and any other information to be supplied is being delivered to you for informational purposes only and upon the express understanding that you will keep confidential the information contained herein or sent herewith or made available in connection with further inquiries pursuant to the terms of the Non-Disclosure Agreement that the recipient of this presentation and the information supplied herein has executed with CBL prior to the receipt hereof and nothing contained herein shall supersede or limit the provisions of the Non-Disclosure Agreement. NOTE: This presentation includes financial forecasts with respect to certain metrics of CBL. These projections have not been prepared in accordance with GAAP and should not be relied upon as being indicative of future results. The assumptions and estimates underlying these forecasts are inherently uncertain, are subject to a number of risks, including those referred to herein, and are subject to change. These projections speak only as of the date of this presentation and CBL has no obligation, and makes no undertaking, to update the projections.
Risk Factors The current pandemic of the novel coronavirus, or COVID-19 has, and could continue to, materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as could any future outbreak of another highly infectious or contagious disease. Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has had, and may continue to have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many - including the United States - have reacted by instituting quarantines, mandating business and school closures and restricting travel. Certain states and cities, including where we own properties and where our corporate headquarters is located, have also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. The Company cannot predict if additional states and cities will implement similar restrictions or when restrictions currently in place will be lifted . As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the retail industry in which the Company and our tenants operate. A majority of our tenants have announced temporary closures or other limits on the operations of their stores and requested rent deferral or rent abatement during this pandemic or have failed to pay rent. In addition, state, local or industry-initiated efforts, such as tenant rent freezes, or governmental or court-imposed delays in the processing of landlord initiated commercial eviction and collection actions in various jurisdictions in light of the COVID-19 pandemic, may also affect our ability to collect rent or enforce remedies for the failure to pay rent. We believe our tenants do not have a contractual right to cease paying rent due to government-mandated closures and we intend to enforce our rights under our lease agreements. However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured, and it is possible future governmental action could impact our rights under the lease agreements. The extent of tenant requests and actions, and the resulting impact to the Company’s results of operations and cash flows, is uncertain and cannot be predicted.
Risk Factors In addition, in response to an executive order issued by state and local authorities, most of our employees based at our headquarters are currently working remotely. The effects of the executive order, including an extended period of remote work arrangements, could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. The COVID-19 pandemic, or a future pandemic, could also have further material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action; the reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; the reduced economic activity, as well as any lasting reduction in consumer activity at brick-and-mortar commercial establishments due to changed habits in response to the prolonged existence and threat of the COVID-19 pandemic, could result in a prolonged recession and could negatively impact consumer discretionary spending; difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us; permitting, inspections and reviews by jurisdictional planning commissions and authorities is also likely to be delayed or postponed which could materially impact the timeline and budgets for completing redevelopments; projects in our redevelopment pipeline may not be pursued or may be completed later or with higher costs than anticipated, potentially causing a loss that exceeds our investment in the project; the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our credit facility, indentures and other recourse and non-recourse debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our revolving credit facility and pay dividends;
Risk Factors any impairment in value of our tangible assets and intangible lease assets that could be recorded as a result of weaker economic conditions; a deterioration in our or our tenants' ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' efficient operations could adversely affect our operations and those of our tenants; the ability to renew leases or re-lease vacant spaces on favorable terms, or at all; and the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption. The extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional closures by our tenants of their stores and early terminations by our tenants of their leases could further reduce our cash flows, which could impact our ability to resume paying dividends to our stockholders at any point in the future. The extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional closures by our tenants of their stores and early terminations by our tenants of their leases could further reduce our cash flows, which could impact our ability to resume paying dividends to our stockholders at any point in the future. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. T he COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance. Please see CBL’s filings with the SEC for additional risk factors.
CBL Business Update
Operational Update COVID-19 Portfolio and Tenant Impact: The majority of the properties in the CBL portfolio closed during the month of March 2020 as a result of government-mandated orders. CBL believes it fully preserved its lease rights by closing locations when governmentally mandated and notified the majority of national tenants that did not pay April rents that they were in default of their lease obligations. The majority of CBL’s properties re-opened by June including two properties for curbside or exterior only. All properties are open today. The majority of CBL’s tenants requested deferral of rent or in certain instances, abatement of rents due. Given that stores were closed for roughly 6-8 weeks and sales recovery has been gradual, CBL has worked with many of its tenants on partial rent deferral or relief. As of June 30, 2020, CBL had receivables of approximately $9 million related to rents that had been deferred and had granted abatements of approximately $2 million. As of early August and based on agreements that had been executed or were in active negotiation at that time, CBL estimated that it would defer approximately $17 million, at CBL’s share, in rents that were billed for the months of April, May and June.
Rent Collection CBL’s collection rate has increased dramatically as properties reopen (amounts below are as paid, and do not reflect any adjustment for prepaid or application of past due rent): As CBL has completed negotiations with retailers, past due rent has been paid, increasing the rent collection percentage for prior months. We expect this trend to continue. After applying these past due rents and adjusting for any prepaid rents the collection rate is as follows as of October 1, 2020: April May June July August September 75% 67% 68% 65% 73% 58% April May June July August September 27% 33% 65% 90% 95% 106%
Tenant Update COVID-19 Portfolio and Tenant Impact: Though early August, more than twelve national tenants had declared bankruptcy, including major CBL tenants. As of June 30, 2020, J.C. Penney and Ascena Retail Group, Inc. represented $18.5 million in gross annual revenue and comprised over 6 million square feet. Ascena has announced plans to close the Catherine’s and Justice divisions, which represents approximately 55 of CBL’s 108 stores. The remaining tenants in bankruptcy represented more than $22 million in gross annual revenue as of June 30, 2020, and comprised 1.1 million square feet including Chuck E. Cheese, Pier 1 Imports, Tailored Brands, Inc., Stage Stores, Inc., New York & Co., and GNC. While each situation remains fluid, the majority of these have announced some store closures but a number are expected to reorganize and continue to operate. Theaters continue to struggle as major movie releases have been delayed and many have not yet reopened or have opened with severe occupancy restrictions. As of June 30, 2020, CBL had 27 theaters in its portfolio representing approximately 1.3 million square feet and $22 million in gross annual rent.
Traffic Trends Asheville Mall Hamilton Place CoolSprings Galleria Oak Park Mall West County Center Aggregate Sequential Change: June 2020 vs. May 2020 196.8% 59.2% 67.8% 143.2% 335.9% 123.0% July 2020 vs. June 2020 5.8% 0.2% (8.3)% (2.4)% 2.2% (1.2)% August 2020 vs. July 2020 12.3% 14.1% 5.7% 6.2% (3.0)% 6.4% Sept. 2020 vs. August 2020 0.4% (11.4)% 0.5% (2.3)% (11.3)% (10.6)% Year-over-Year Change: June 2020 vs. June 2019 (49.6)% (36.3)% July 2020 vs. July 2019 (46.9)% (43.9)% August 2020 vs. August 2019 (44.4)% (37.2)% (39.1)% (43.2)% (44.5)% (41.6)% Sept. 2020 vs. Sept. 2019 (30.0)% (35.5)% (35.3)% (41.4)% (43.7)% (37.9)% Traffic information represents period to period change in individual visits for select properties. Prior year period for certain malls only available beginning as of August 2019. Traffic trends shown may not be indicative of trends in broader CBL portfolio.
Sales While traffic and sales remain depressed compared with prior periods, retailers are reporting higher conversion rates as shoppers become more deliberate in their visits. The majority of retailers re-opened during the third quarter; however, sales results continue to be difficult to parse with varying levels of occupancy and operating restrictions continuing across the country. Sales in border markets have been hit significantly with the Mexico/US border remaining closed until at least October 21st. Athletic footwear retailers performed well during the third quarter. Several posted increased sales over the prior year, which was attributed to new shoe releases.
Leasing Update – New Deals/Openings CoolSprings Galleria - OFS CoolSprings Galleria Hamilton Place - OFS West County Center Annex at Monroeville Mall CoolSprings Galleria - OFS West County Center West Towne Mall - OFS Fayette Mall CoolSprings Galleria Deals shown are executed or open unless listed as out for signature (OFS). There is no guarantee that OFS deals will be completed.
Leasing Update – New Multi-Location Deals/Openings 17 Locations 13 Locations 6 Locations ~20 Pop-Up Seasonal Locations - OFS Multiple Locations - OFS 5 Locations (inc. 1 OFS) Deals shown are executed or open unless listed as out for signature (OFS). There is no guarantee that OFS deals will be completed.
2020 Redevelopment Projects Center Tenants Opening CBL’s Share of Total Proforma Costs (in millions) Construction Loan Commitment ‘20 Gross Est. Cost incl. loan draws/land value ‘20 Net Est. Cost (Cash) (1) Fremaux Town Center (JV) Old Navy Open $1.8 $1.8 $1.8 Parkdale Mall (2) Self Storage (50/50 JV) Open 4.4 $3.3 2.3 - CherryVale Mall Tilt (Sears redev) Open 3.5 0.3 0.3 Dakota Square Ross (Herberger’s redev) Open 6.4 0.8 0.8 Hamilton Place (3) DSG, Dave & Busters, Cheesecake (Sears Redev) Open 38.7 8.5 8.5 Mall del Norte Main Event (F21 Redev) Open 10.5 1.3 1.3 The Promenade Five Below/Carter’s Open 2.8 1.6 1.6 Hamilton Place (4) Self Storage (60/40 JV) Open 5.6 4.2 4.2 - Mayfaire Town Center First Watch Open 2.3 1.7 1.7 Coastal Grand (5) DSG/Golf Galaxy Open 6.6 4.0 4.3 0.9 Westmoreland Chipotle (JCP Pad) Open 1.0 0.8 0.8 Total $83.6 $11.5 $27.6 $17.7 Costs represent CBL’s estimate share of pro forma costs, which are subject to change and revision. Net Costs exclude loan draws and imputed land value as described in footnotes below. 2020 costs include $0.9 M imputed value of land contribution with remainder funded through $1.4M loan draw Costs exclude cost to acquire vacant dept. store Total cost includes $1.4M imputed value of land contribution. 2020 costs were funded through $4.2M loan draw 2020 cost partially funded by $3.5M loan draw
2021 Redevelopment Projects Center Tenants Opening CBL’s Share of Total Proforma Cost (in millions) Construction Loan Commitment ‘20 Gross Est. Cost incl. loan draws/land value ‘20 Net Est. Cost (Cash) (1) ‘21 Gross Est. Cost incl. loan draws ‘21 Net Est. Cost (Cash) (1) Cross Creek Mall (2) Restaurants, Rooms to Go Q3 2021 $14 $4.9 $4.9 $7.5 $7.5 Meridian Mall Huntington Bank (pad) Q2 2021 1.0 0.5 0.5 0.5 0.5 Parkdale Crossing Spectrum, shops Q3 2021 1.2 0.1 0.1 1.0 1.0 The Plaza at Fayette Moe’s Grill/BurgerFi Q1 2021 3.5 1.4 1.4 1.7 1.7 Hamilton Place (3) Aloft Hotel (50/50 JV) Q1 2021 12.0 $8.4 9.7 0.8 1.7 - Pearland Town Center HCA Office Building Q1 2021 14.2 5.6 5.6 6.6 6.6 Total $45.9 $8.4 $22.2 $13.3 $19.0 $17.3 Costs represent CBL’s estimate share of pro forma costs, which are subject to change and revision. Net Costs exclude loan draws and imputed land value as described in footnote below. Costs exclude cost to acquire former department store building. 2020 cost includes $2.2M imputed value for land contribution and is partially funded by $6.7M loan draw. 2021 costs funded by $1.7M loan draw.
Business Plan
Situational Overview Business Plan Highlights BUSINESS HIGHLIGHTS BASIS OF PRESENTATION KEY ASSUMPTIONS KEY METRICS ($ in M) BRG and the Company prepared a go-forward business plan for the remainder of FY’20 through FY’21 Projections prepared based on performance adjusted for CV19 and current tenant negotiations Business plan was prepared at the unit level Forecast Presentation Format (Basis of Presentation) The Company’s effective share of consolidated properties is approx. 98% after excluding minority interest The Company’s effective share of Unconsolidated JV’s is approx. 55%. These properties include but are not limited to Coolsprings Galleria, Friendly Center, and others Six lender properties (Ashville, Burnsville Center, Eastgate, Hickory Point, Greenbrier, Park Plaza) are excluded from go forward projections (approx. $33M in NOI and $325M in debt) CBL Consol. CBL Uncon. JV Property Exclusion Lender Properties CBL Share CBL Consolidated properties CBL Unconsolidated properties Removal of non-CBL interest in Consolidated JV’s (2%) and Unconsolidated JV’s (45%) Removal of six (6) properties that are assumed by the existing lenders Basis of presentation Unless otherwise stated Item Timing Petition Date October Debt amortization ($49M per year for Bank Term Loan) 2021 Revenue Reserve Adjustment of $35M 2021 Equitization of SUN¹ with $500M in takeback notes (10% coupon) December FY 19 FY 20 FY 21 Revenue 861 650 672 Mcash NOI 594 422 436 FFO (As Adjusted) 271 176 217 Same Center NOI 562 406 436 Senior Unsecured Notes
Executive Summary Projected Modified Cash NOI1 and FFO (As Adjusted) FY19 – FY21 KEY OBSERVATIONS CBL SHARE – PROJECTED MODIFIED CASH NOI AND FFO (As Adj.) CBL has forecasted 2020 through 2021 based on Lease renewal rates, and Impact of CV19 for the remainder of 2020 and 2021 In addition to the above, forecast was driven by: Occupancy targets, Average base rent, Spread assumptions regarding lease up, renewals and co-tenancy Impact of CV19 and potential issues around certain anchor closings and tenants filing Chapter 11 Revenue: is forecasted to decline from $861M in FY19 to $650M in FY20 or a decrease of ~$211M. This reduction is primarily attributed to the closure of malls for over 3 months, recent retail bankruptcies and lower renewal rates. Majority of these changes can be attributed to the CV19 pandemic Modified Cash NOI: is forecasted to decline from $594M in FY19 to $422M predominately driven by the reductions in revenue offset by reductions in expenses and tenant negotiations Funds From Operations (FFO) (As Adjusted): are forecasted to decline from $271M in FY19 to $176M in FY20 primarily due to the reductions in revenue offset by Corporate reductions and modest reductions in interest expense Modified Cash NOI excludes straight line rents, above / below market lease rates, landlord inducements and lease buyouts and management fees
Executive Summary Income Statement – CBL Share (Dollars in Millions) 1 Other income for 2020 & 2021 includes gain on extinguishment of debt for properties being returned to the lender and restructuring of proposed debt
Executive Summary Statement of Cash Flows – CBL Share (Dollars in Millions) Includes impact of extinguishment of debt for properties being returned to the lender and restructuring of proposed debt 1 1 1
SUPPLEMENTAL INFORMATION Capital Expenditures By Year – Dollars in Millions (CBL Share) CAPITAL EXPENDITURES BY TYPE1 CAPITAL EXPENDITURES CapEx spend is net of construction loans and contributed land: Cash Basis
Liquidity Update
Cash Forecast Cash balance (excludes ~$150mm in cash held in U.S. Treasuries )1 is forecasted to decline by ($14.7mm) during the 13-week period ended 1/02/21 Includes CBL Properties accounts at CBL ownership % and excludes cash trapped properties
Exhibit 99.2
Privileged & Confidential Draft
Attorney-Client Work Product / Subject to FRE 408 & Similar Provisions
Subject to Provisions in the Pre-Negotiation Agreement dated April 22, 2020
Preliminary Analysis – Subject to Material Revision
Not for Further Distribution
September 3, 2020
CBL & Associates Properties, Inc.
Term Sheet
FIDENTIAL 1
© 2020, Ducera Partners LLC / CON
Privileged & Confidential Draft
Attorney-Client Work Product / Subject to FRE 408 & Similar Provisions
Subject to Provisions in the Pre-Negotiation Agreement dated April 22, 2020
Preliminary Analysis – Subject to Material Revision
Not for Further Distribution
Restructuring Term Sheet
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9/3/20 Term Sheet |
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Treatment of Equity Treatment of Notes Treatment of Credit Facility |
Principal Amount |
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~$1.123 billion (combined currently outstanding revolver and term loan amount); to be partially paid down at close of transaction as noted below |
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Term |
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Five-year term, structured as a three-year term with two one-year extension options |
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Commitment Fee |
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50bps at close, additional 25bps upon each extension |
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Rate |
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L+375bps coupon, 25bps LIBOR floor |
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Amortization |
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$75 million per annum for years one to three, $85 million per annum for years four and five, as applicable |
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Collateral Support |
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First priority liens on existing borrowing base properties and additional properties totaling ~$166 million in projected 2021 NOI; properties outlined on the following page Pledges of or guarantees from any properties with first priority liens / pledges / guarantees granted to the New Notes; properties to consist of unencumbered assets not listed on the following page Pari passu guarantees on all other properties with guarantees granted to the New Notes up to an amount equal to the face value of the existing Credit Facility; properties include all other JV and mortgage entity properties |
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Covenants |
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Minimum debt yield of 10% from September 30, 2020 to September 30, 2021; 12% thereafter Minimum capex/TI/redevelopment spend at the borrowing base properties; to be determined based on either a percentage of annual spend or a fixed dollar amount Other non-financial covenants similar to current Credit Facility Covenant holiday TBD following close of the transaction |
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ECF Sweep |
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100% of all excess cash flow (to be defined) to pay down the Credit Facility balance |
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Restricted Payments |
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Dividends and other payments to be restricted to the minimum amount required to maintain REIT status with dividends payable in stock where allowed |
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Cash Consideration |
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Borrower shall make a principal payment at closing in the amount of $24 million applied to the Credit Facility |
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Waiver of Base Rate Interest and Default Interest |
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If Borrower complies with the closing conditions, the Lenders shall waive the ~$17 million in retroactive Base Rate interest having accrued from July 1, 2019 plus any and all Default Interest having accrued |
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Principal Amount |
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$500 million |
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Term |
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Eight-year term (June 2028 maturity) |
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Rate |
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8.00% coupon |
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Collateral Support |
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First priority liens on, pledges of, or guarantees from properties totaling ~$76 million in projected 2021 NOI consisting of consisting of ~$47 million of first priority liens against certain unencumbered properties, ~$5 million of priority guarantees from certain unencumbered properties, ~$15 million of priority guarantee / equity pledges from certain unencumbered properties, and ~$9 million of first priority liens against certain unencumbered properties that may be released by the Board of Directors Guarantees from any properties with first priority liens granted to the Credit Facility; properties outlined on the following page Pari passu guarantees on all other properties with guarantees granted to the Credit Facility up to an amount equal to the face value of the New Notes; properties include all other JV and mortgage entity properties |
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Cash Consideration |
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Up to $50 million cash payment made to creditors at close of the transaction |
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Equity Consideration |
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90.0% of reorganized equity |
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Equity Consideration |
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10.0% of reorganized equity Three series of warrants exercisable for 20.0% of reorganized equity |
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2
© 2020, Ducera Partners LLC / CONFIDENTIAL
Privileged & Confidential Draft
Attorney-Client Work Product / Subject to FRE 408 & Similar Provisions
Subject to Provisions in the Pre-Negotiation Agreement dated April 22, 2020
Preliminary Analysis – Subject to Material Revision
Not for Further Distribution
New Credit Facility Borrowing Base Properties
The properties below would support the Credit Facility through a first priority lien
Attributable
Property List NOI
Borrowing Base Collateral
Existing Borrowing Base $122.8
Existing Borrowing Base Properties $122.8
Additional Collateral
Alamance Crossing – West
Brookfield Square
Coolsprings Crossing
Frontier Square
Gunbarrel Point
Parkway Place
Pearland Town Center - HCA Office
Pearland Town Center – Residences
Shoppes @ St. Clair
Southaven Towne Center
Southaven Towne Center - Self Development
St. Clair Square
Sunrise Commons
Valley View Mall
WestGate Crossing
West Towne Crossing
Total Additional Collateral $43.7
Total NOI $166.4
3
© 2020, Ducera Partners LLC / CONFIDENTIAL
Privileged & Confidential Draft
Attorney-Client Work Product / Subject to FRE 408 & Similar Provisions
Subject to Provisions in the Pre-Negotiation Agreement dated April 22, 2020
Preliminary Analysis – Subject to Material Revision
Not for Further Distribution
Disclaimer
The information herein has been prepared exclusively for Recipients by Ducera Partners LLC ("Ducera"). The information contained herein is based on publicly available sources and materials provided by counsel and Ducera has not assumed any responsibility for independently verifying such information. No representation or warranty, express or implied, is or will be made, and no responsibility or liability is or will be accepted, by Ducera or by any of its officers, directors or agents as to or in relation to the accuracy or completeness of any information contained herein. In furnishing this information, Ducera undertakes no obligation to provide Recipients with access to additional information, to update any information contained herein, or to correct any inaccuracies herein. These materials and the information contained herein are confidential and may not be disclosed publicly or made available to third parties without the prior written consent of Ducera.
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© 2020, Ducera Partners LLC / CONFIDENTIAL
Exhibit 99.3
CBL
CREDIT FACILITY TERM SHEET
October 27, 2020
Privileged & Confidential
Prepared at the Direction of Counsel
Subject to Material Change
Subject to FRE 408
Privileged & Confidential
Prepared at the Direction of Counsel
Subject to Material Change
|
|
Ad Hoc Group Proposal |
|
Credit Facilities |
> Secured takeback debt |
|
‒ Amount: $[950]mm (amount will be equal to the value of the collateral) ‒ Maturity: December 2027 ‒ Interest Rate: L + 350 bps (50 bps floor) ‒ Amortization: None ‒ Paydown: None ‒ Upfront Fee: None ‒ Collateral: Liens on existing Borrowing Base properties; no additional collateral ‒ Guarantors: No guarantee from CBL LP, or its successor; no recourse to any legal entities other than entities holding Borrowing Base properties ‒ Financial Covenants: TBD ‒ Restricted Payments: No limitation on Restricted Payments |
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> Pro rata share of $[750]mm of new preferred equity, to be shared pro rata among the Credit Facility claim (until payment in full) and bondholder claim: ‒ Estimate $[173]mm of new preferred equity o Depending upon the amount of new secured takeback debt, new preferred equity may be re-sized to ensure a par recovery to the Credit Facility banks (i.e. secured takeback debt plus new preferred equity to Credit Facility to equal par recovery) ‒ [TBD]% PIK dividend ‒ Votes with the reorganized common equity as a single class on a one-for-one basis on all matters submitted to the holders of reorganized common equity ‒ Other terms TBD |
|
|
Unsecured Bonds |
> Pro rata share of $[750]mm of new preferred equity (estimated to equal): ‒ Estimate $[577]mm of new preferred equity
> 90% of reorganized common equity(1) |
2
(1) Subject to dilution from MIP and warrants.
Privileged & Confidential
Prepared at the Direction of Counsel
Subject to Material Change
|
|
Ad Hoc Group Proposal |
|
Preferred Equity |
> If preferred holders vote in favor of the transaction, TBD split of 10% of reorganized common equity on a pre-diluted basis(1) to be shared with existing common equity and TBD split of Warrants (as defined below) ‒ $5mm cash out option for existing preferred holders on terms reasonably acceptable to the Company and Required Consenting Noteholders > If preferred holders vote against the transaction as a class, preferred holders shall recover zero |
|
Common Equity |
> If common equity holders and special common units vote in favor of the transaction as a class, common shareholders and special common unit holders shall receive 10% of the reorganized common equity on a pre-diluted basis(1) to be split TBD with preferred equity > Three warrant packages (“Warrants”); Warrants to be split TBD between preferred equity and existing common equity ‒ Package A: 6.67% 3-year warrants with a strike price where bonds recover 80% ‒ Package B: 6.67% 3-year warrants with a strike price where bonds recover 95% ‒ Package C: 6.67% 4-year warrants with a strike price where bonds recover 110% > If common equity holders vote against the transaction as a class, common equity holders shall recover zero > Warrants expire if they are trading at a 35% premium to their strike price for 90 days without exercise |
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Management |
> Up to 10% of reorganized common equity |
|
Incentive Plan |
|
|
(“MIP”) |
|
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Board of Directors |
> 1 member is CEO > 5 members selected by Required Consenting Noteholders > 1 member selected by Company Parties and reasonably acceptable to Required Consenting Noteholders |
3
(1) Subject to dilution from MIP and warrants.
Privileged & Confidential
Prepared at the Direction of Counsel Subject to Material Change Subject to FRE 408
Disclaimer
This document contains highly confidential information and is solely for informational purposes. You should not rely upon oruse it to form the definitive basis for any decision or action whatsoever, with respect to any proposed transaction or otherwise. You and your affiliates and agents must hold this document and any oral information provided in connection with this document, as well as any information derived by you from the information contained herein, in strict confidence and may not communicate, reproduce or disclose it to any other person, or refer to it publicly, in
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SECRET MATERIAL DISTRIBUTED UNDER LICENSE FROM SNL. FOR RECIPIENT’S INTERNAL USE ONLY.”
Copyright © 2020, PJT Partners LP (and its affiliates, as applicable).
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Exhibit 99.4
News Release
Investor Contact: Katie Reinsmidt, Executive Vice President & Chief Investment Officer, 423.490.8301, Katie.Reinsmidt@cblproperties.com
Media Contact: Stacey Keating, Senior Director – Public Relations & Corporate Communications, 423.490.8361, Stacey.Keating@cblproperties.com
CBL PROPERTIEs COMMENCES VOLUNTARY BANKRUPTCY PROCEEDINGS TO EXECUTE noteholder SUPPORTED PLAN TO SIGNIFICANTLY STRENGTHEN financial position
CHATTANOOGA, Tenn. (November 2, 2020) – CBL Properties (NYSE:CBL) today announced that CBL & Associates Properties, Inc., CBL & Associates Limited Partnership (the “Operating Partnership”), and certain other related entities have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Houston, TX (the “Court”) in order to implement a plan to recapitalize the company, including restructuring portions of its debt. Through this process, all day-to-day operations and business of the Company’s wholly owned, joint venture and third-party managed shopping centers will continue as normal. CBL’s customers, tenants and partners can expect business as usual at all of CBL’s owned and managed properties.
The Company intends to use the Chapter 11 process to implement terms outlined in the Restructuring Support Agreement (the “RSA”) that it entered into on August 18, 2020, with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts, or other entities (the “noteholders”) representing in excess of 62% (including joinders) of the aggregate principal amount of the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”), the Operating Partnership’s 4.60% senior unsecured notes due 2024 (the “2024 Notes”) and the Operating Partnership’s 5.95% senior unsecured notes due 2026 (the “2026 Notes” and together with the 2023 Notes and the 2024 Notes, the “Unsecured Notes”).
The RSA contemplates agreed-upon terms of a pre-arranged comprehensive restructuring of the Company’s balance sheet (the “Plan”). The Plan will provide the Company with a significantly stronger balance sheet by reducing total debt and preferred obligations by approximately $1.5 billion, extending debt maturities and increasing liquidity while maintaining operational consistency.
“After months of discussions and consideration of a number of alternatives, CBL’s management and the Board of Directors firmly believe that implementing the comprehensive restructuring as outlined in the RSA through a Chapter 11 voluntary bankruptcy filing will provide CBL with the best plan to emerge as a stronger and more stable company,” said Stephen D. Lebovitz, Chief Executive Officer of CBL. “With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business.”
Lebovitz added, “We have continued negotiations with the lenders under our secured credit facility since the signing of the RSA and expect further discussions in an effort to reach a tri-party consensual agreement between the Company, noteholders and credit facility lenders during the bankruptcy process.”
As of September 30, 2020, CBL had approximately $258.3 million in unrestricted cash on hand and available-for-sale securities. The Company’s cash position, combined with the positive cash flow generated by ongoing operations, is expected to be sufficient to meet CBL’s operational and restructuring needs.
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CBL Properties Commences Voluntary Bankruptcy Proceedings to Execute Noteholder Supported Plan
November 2, 2020
Page 2
The Company has filed various customary motions with the Court seeking several types of relief to allow CBL to meet necessary obligations and fulfill its duties during the restructuring process, including authority to continue payment of employee wages and benefits, honor certain customer and vendor commitments and otherwise manage its day-to-day operations as usual.
Certain subsidiaries, including CBL’s joint ventures and the majority of CBL’s special purpose entities holding properties that secure mortgage loans, were not included as part of the in-court process. Subject to Court approval, CBL anticipates continuing to meet all debt service and other obligations, as required, under its property level secured loans and joint venture partnerships.
The latest information on CBL’s restructuring, including news and frequently asked questions, can be found at cblproperties.com/restructuring.
Weil, Gotshal & Manges LLP is serving as legal counsel to the Company and Moelis & Company is serving as restructuring advisor.
No Solicitation or Offer
Any new securities to be issued pursuant to the restructuring transactions may not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws but may be issued pursuant to an exemption from such registration provided in the U.S. bankruptcy code. Such new securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. This press release does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any securities referred to herein, nor is this press release a solicitation of consents to or votes to accept any Chapter 11 plan. Any solicitation or offer will only be made pursuant to a confidential offering memorandum and disclosure statement and only to such persons and in such jurisdictions as is permitted under applicable law.
About CBL Properties
Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s portfolio is comprised of 107 properties totaling 66.7 million square feet across 26 states, including 65 high‑quality enclosed, outlet and open-air retail centers and 8 properties managed for third parties. CBL seeks to continuously strengthen its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information, visit cblproperties.com.
Information included herein contains “forward-looking statements” within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company’s various filings with the Securities and Exchange Commission, including without limitation the Company’s Annual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included therein, for a discussion of such risks and uncertainties.
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