Washington Prime Group’s Voluntary Chapter 11 Financial Restructuring

Kirkland & Ellis advised Washington Prime Group Inc. (NYSE: WPG) and certain of its subsidiaries on the filing of voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. Davis Polk advised SVPGlobal and its affiliated funds.

Washington Prime Group entered Chapter 11 after executing a restructuring support agreement (the “RSA”) with creditors, led by SVPGlobal, that hold approximately 73% of the principal amount outstanding of the Company’s secured corporate debt and 67% of the principal amount outstanding of the Company’s unsecured notes (collectively, the “Consenting Creditors”). The Company will utilize Chapter 11 to implement a comprehensive and consensual financial restructuring of the Company’s corporate-level debt that will allow the Company to substantially deleverage its balance sheet and strengthen its business and operations going forward, either through a full equitization of the Company’s unsecured notes or an alternative value-maximizing transaction that would repay, in full in cash, all of the Company’s corporate-level debt.

In connection with the chapter 11 filing, Washington Prime Group obtained a $100 million delayed-draw debtor-in-possession financing facility from SVPGlobal and the ad hoc lender group to support day-to-day operations during the Chapter 11 process.

The RSA provides for 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. The RSA contemplates a $325 million equity rights offering, fully backstopped by SVPGlobal, the proceeds of which will be applied to, among other things, the pay down of secured debt. The RSA also provides for a consensual takeback paper exit facility, payment in full of all claims held by vendors and service providers, and a recovery for the company’s existing common and preferred equity holders of $40 million in cash or 6.125% of new equity (subject to dilution). Additionally, the RSA allows the company to market its assets to determine whether an alternative transaction that repays existing corporate indebtedness in full, in cash, and delivers greater aggregate recoveries to existing common and preferred equity holders is attainable.

Washington Prime Group Inc. is a retail REIT and a recognized leader in the ownership, management, acquisition and development of retail properties.

The Kirkland team was led by restructuring partners Chad Husnick (Picture) and Joshua Sussberg.

The Davis Polk team advising SVPGlobal and its affiliated funds included partners Damian S. Schaible and Angela M. Libby, counsel Aryeh Ethan Falk and associate Stella Li. The real estate team included partner Brian D. Hirsch, counsel Susan D. Kennedy and associate David Beizer. The finance team included counsel Christian Fischer. The tax team included partner Patrick E. Sigmon. Partner William L. Taylor advised on corporate matters and partner Nicholas A. Kronfeld advised on securities law.

Involved fees earner: David Beizer – Davis Polk & Wardwell; Aryeh Falk – Davis Polk & Wardwell; Christian Fischer – Davis Polk & Wardwell; Brian Hirsch – Davis Polk & Wardwell; Susan Kennedy – Davis Polk & Wardwell; Nicholas Kronfeld – Davis Polk & Wardwell; Stella Li – Davis Polk & Wardwell; Angela Libby – Davis Polk & Wardwell; Damian Schaible – Davis Polk & Wardwell; Patrick Sigmon – Davis Polk & Wardwell; William Taylor – Davis Polk & Wardwell; Chad Husnick – Kirkland & Ellis; Joshua Sussberg – Kirkland & Ellis;

Law Firms: Davis Polk & Wardwell; Kirkland & Ellis;

Clients: Strategic Value Partners – SVP; Washington Prime Group Inc.;

Author: Martina Bellini