CBL hit by bankruptcy of top retailer Ascena
Mall operator in talks with lenders over debt
While mall operator CBL & Associates remains in talks with lenders over its debt, the company received a blow Thursday as one of the top retailers in its centers filed for bankruptcy.
Ascena Retail Group Inc., which runs Ann Taylor, Loft, Lane
Bryant, Justice and Catherines stores, became the latest retailer to seek Chapter 11 bankruptcy amid the coronavirus pandemic.
In Chattanooga, Catherines is to shut its store outside Hamilton Place mall, according to a list of closures obtained by USA Today. Also, Justice is to close at Northgate Mall, the list said.
Across Chattanooga-based CBL’s national network of shopping centers, Ascena is No. 6 on the company’s top 25 list of retailers by revenue, according to a Securities and Exchange Commission filing.
At the end of 2019, Ascena had 114 stores in CBL centers, leasing 544,193 square feet and providing 1.54% of revenues, the filing said.
Ascena operates nearly 3,000 stores mostly at malls, and it had been dragged down by debt and weak sales for years.
As part of its bankruptcy plan, the company said it would close all of its Catherines stores and “a significant number” of
Justice stores and a select number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores.
In the Chattanooga area, an Ann Taylor Factory Store and a Justice unit will close in Calhoun, Georgia, the USA Today list said. A Justice store will shutter in Rome, Georgia.
Also Thursday, CBL said in an SEC filing that it reached an agreement to extend debt discussions with lenders into next week as it grapples with falling revenues during the pandemic.
The operator of 108 properties nationally, including both Hamilton Place and Northgate malls, extended forbearance agreements related to two loans until Monday. In addition, the company said it will continue talks regarding a credit agreement extended until Wednesday.
“The company is continuing to engage in negotiations and discussions with the holders and lenders of the company’s indebtedness.
There can be no assurance, however, that the company will be able to negotiate acceptable terms or to reach any agreement with respect to its indebtedness,” CBL said.
About three weeks ago, the company first entered into a similar agreement over some of its debt after CBL said it chose to not make interest payments of $18.6 million and $11.8 million. The company is in talks with lenders amid a sharp downturn caused by the temporary closing of malls and retail stores earlier this year amid the coronavirus outbreak.
The price of CBL’s stock on Thursday closed at 18.76 cents per share, up 0.0065 cents, or 3.59%.
But last Monday, shares dropped nearly 25% after Bloomberg reported the company may be preparing a Chapter 11 bankruptcy filing.
Chris Kuiper, vice president of equity research at CFRA Research, said malls had been struggling and generally falling out of favor among shoppers, and then the coronavirus hit. Malls and retailers inside them were forced to close temporarily earlier this year.
“It went from bad to worse and then catastrophic,” he said. “COVID has accelerated the trend.”