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A Look At How The Bankruptcy Negotiating Process Impacted REIT CBL & Associates Investors

WYCO Researcher profile picture
WYCO Researcher
7.68K Followers

Summary

  • Bankrupt CBL & Associates' newly revised RSA greatly changes the recoveries for various investors.
  • The new RSA is now supported by bank lenders.
  • The latest monthly operating report filed on March 31 continues to show very weak operating results.
  • Equity holders are still being "gifted" recoveries, but their recoveries are worth less than under prior proposals.

Empty shopping center or building entrance and business building reflection
Photo by olaser/E+ via Getty Images

REIT mall owner CBL & Associates Properties (OTCPK:CBLAQ) filed another revised Restructuring Support Agreement last week (docket 980) after weeks of mediation. The negotiations for a restructuring have been going on since early last year. While

This article was written by

WYCO Researcher profile picture
7.68K Followers
B.A. in Economics; M.S. in Finance. I usually write about distressed companies and companies in Ch.11 bankruptcy. I am semi-retired after spending decades in investments.

Analyst’s Disclosure: I am/we are short BTU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (70)

s
Hi,
Can someone trade the new bonds?
I still can't do that via IBKR.
Mikahson profile picture
Can someone please tell me the exact conversion rate for the bonds (i.e. for every $1000 bonds, how many shares, 10% and chash)? @muishin @bagger10 @seves
s
@Mikahson
CBL 5.95 12/15/26(US12505JAD54) Cash and Stock Merger (Acquisition) CBL 10% NOTES 208255603 FOR 625000000, US1248308785 6891641 FOR 625000000 AND USD 0.0562378 (CBL, CBL & ASSOCIATES PROPERTIES, US1248308785)

I got for every $1000:

208255603/625000000*1000= $333, 10% new bonds
Plus 6891641/625000000*1000 = 11,0266256 new hares
Plus 0,0562378 *1000 = $56,2378
s
@seves

CBL 5 1/4 12/01/23(US12505JAA16) Cash and Stock Merger (Acquisition) CBL 10% NOTES 33301252929 FOR 100000000000, US1248308785 1102012509 FOR 100000000000 AND USD 0.05620465 (CBL, CBL & ASSOCIATES PROPERTIES, US1248308785)

CBL 4.6 10/15/24(US12505JAB98) Cash and Stock Merger (Acquisition) CBL 10% NOTES 16702269997 FOR 50000000000, US1248308785 1105430508 FOR 100000000000 AND USD 0.05637897 (CBL, CBL & ASSOCIATES PROPERTIES, US1248308785)

CBL 5.95 12/15/26(US12505JAD54) Cash and Stock Merger (Acquisition) CBL 10% NOTES 208255603 FOR 625000000, US1248308785 6891641 FOR 625000000 AND USD 0.0562378 (CBL, CBL & ASSOCIATES PROPERTIES, US1248308785)
Mikahson profile picture
@seves Thank you!
s
Have anyone got the changeable notes 7%? When 10% notes to be converted into 7% notes?
muishin profile picture
@seves Did you elect for the convertible notes with epiq and your broker before the deadline back in July? If you did, part of the old notes converted to 7% convertibles when the company exited bankruptcy last week. The 10% notes will not be converted to convertibles.
bagger10 profile picture
@seves I received my 7% converts on the same day I got my 10% notes
muishin profile picture
@bagger10 What's your plan with the convertibles? Are you going to convert them within 30 days? You think the company will elect to force stock conversion when the company exchange option is triggered if VWAP exceeds 160% of the exchange price 20 out of 30 days? Or you think the company will elect to redeem with cash by paying forward par and 36-months interest?
c
So far rough calculations show that selling before the conversion would have done better $ wise than converting. What else is new.
s
@ccnc3 just wait. And you’ll see $60 price in 1-2 years.
c
@seves

Well I have heard that before. Just wait in another 2 years you might break even, not really given the loss of velocity of the money.
s
@ccnc3 Today $CBL has a good balance sheet, after bankruptcy.
And FFO $200 mln next year even more.
I predict a Cap = 200* 11.2 = $2,5 Bn by the end of 2022.
Today CBL has 32,2 mln shares.
So the price will be $77 in 1-2 years.
Last year I bought $WLL after bankruptcy at $18. They wrote off a debt of 2 billion. And now it costs $70.
Here we will see a similar situation.
WYCO Researcher profile picture
Pfd stock got 0.043912176 of a share of new CBL
Common stock got 0.005457723 of a new share of CBL stock

ticker for new is CBL, which will cause confusion for some old shareholders.-happened with CHK
PI DOG profile picture
@WYCO Researcher the stock will be trading under the ticker CBL? what is CHK? where is the stock trading?
PI DOG profile picture
@PI DOG saw this: All existing common and preferred shares were canceled upon emergence. Existing common shareholders and common unitholders will each receive their pro rata share of 5.5% in the newly reorganized company and existing preferred shareholders will each receive their pro rata share of 5.5% common equity in the newly reorganized company. At emergence CBL will have approximately 20 million diluted shares outstanding. As previously announced, the newly issued shares are expected to begin trading on November 2, 2021, on the NYSE under the symbol “CBL.”
Mikahson profile picture
@PI DOG It's on NYSE, trading already 30'ish. The exchange rate CBLAQ -> CBL is about 183:1. (CHK was Chesapeak, another recent bankruptcy case).
WYCO Researcher profile picture
docket 1545

PLEASE TAKE FURTHER NOTICE that the Effective Date of the Plan
occurred on November 1, 2021. As of the Effective Date, the Plan Injunction is now in place, and, at the time of the filing of this Notice, the Plan has been substantially consummated
PI DOG profile picture
Good to see that all the people who led CBL down the Road to Perdition ALL got big promotions and raises...www.businesswire.com/...
C
@PI DOG Well the bondholders will own the company soon, so they can sack everyone if they want. Keep in mind the Leibovitz's owned tons of CBL stock and I'm sure other management did too, so they got the worst of it out of anyone.
PI DOG profile picture
@Chestrkwll In a sense. I invested in the stock as did many other people. The brothers grim still have their jobs with their big salaries... me, one source of income in retirement is now gone... what is needed at CBL is a complete flush of personalities...
g
Any current thoughts on the stock formerly known as CBL
Mikahson profile picture
@WYCO Researcher Has the amount of unsecured claims been determined yet? Or how/where could I find out that amount (I don't see it in the plan)?
C
Stock has done very well lately...any thoughts?
bagger10 profile picture
Based upon Q2 2021 numbers (just released) annualized FFO is over $300 mil.

Considering the equity value of CBL at bk exit was estimated at $300 mil, that sounds pretty good.
C
@bagger10 is that total equity value or equity value for current common shareholders (like is our equity value 5% of 300 mil?)
bagger10 profile picture
@Chestrkwll The $300 mil is the estimated value of all CBL equity at bk exit. Old common gets 5% of that new equity.
PI DOG profile picture
@bagger10 So the new market cap will be (est) $15,000,000 and outstanding shares will be (est) 9,822,000 shares. Per share value $1.53 (est)... if I have pre bk exit 1,000 shares, on Nov 1 I can estimate my holdings will be $76.50 (est)? 50 shares times $1.53... now the value of my 1,000 shares is $187... should I liquidate prior to november 1 if my estimates are close to actual?
C
So now that the plan is confirmed does anyone care to peg a valuation on the new common equity shares?
bagger10 profile picture
Plan confirmed.
muishin profile picture
@bagger10 There was never any doubt. It was one of the quickest confirmations.
WYCO Researcher profile picture
@muishinOf course if it was in some other federal BK districts the plan may not have been confirmed because not all districts allow "gifting:

Odd plan may be effective until Nov 1-

The preferred holders objecting were all bark and no bite
PI DOG profile picture
stock trading at .125 on april 5 at end of day yesterday is trading at .165... woo-hoo...
C
Stock up 50% today. Any news?
PI DOG profile picture
@Chestrkwll I voted my shares a few days ago. Whether or not to accept what is going on. Had to vote by July 25, so I guess nothing will happen before the 25th...
Robert Lewis profile picture
excellent article. any updates?
Andrew Shapiro profile picture
@WYCO Researcher You have any update to this report, given the updated financial disclosures and ongoing bk hearings? I think an argument might be made that the recovery in asset and market values (especially comps like PEI) has changed circumstances to make the debtor solvent and the consideration being provided to certain creditor classes in excess of their claims and removing impairment from others. Your thoughts?
C
@Andrew Shapiro Do you own any shares?...we already got sent emails to vote on the bankruptcy plan a couple weeks ago
Andrew Shapiro profile picture
@Chestrkwll emails from who? the company, solicitor or your broker (which one?)
C
@Andrew Shapiro my stock broker
C
As the proud holder of 40,000 shares (don't worry I bought most of them for 10 cents, and some of them for way way more), I am looking for suggestions on how to vote for the bankruptcy plan. Should we shareholders accept the plan or reject it. Are we still getting an equity gift? If so I guess something is better than nothing right?
Zhang Fei profile picture
Just an excellent, excellent article. Many thanks, from the cheap seats.
Herman Tai profile picture
Thanks for the details of this messy reorg!
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