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):
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
|
||||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(Former Name or Former Address, 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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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 of this chapter).
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, Pennsylvania Real Estate Investment Trust (“PREIT”) and the other Company Parties (the “Debtors”) filed Chapter 11 Cases in the United States Bankruptcy Court for the District of Delaware and filed the Plan as a prepackaged chapter 11 plan of reorganization with the Bankruptcy Court. All capitalized terms used in this Current Report on Form 8-K and not otherwise defined herein have the meanings ascribed to such terms in the Restructuring Support Agreement, dated as of October 7, 2020, among the Company Parties and the lenders party thereto (as amended, the “RSA”), previously reported on PREIT’s Current Report on Form 8-K filed on October 14, 2020.
The Debtors have filed a motion with the Bankruptcy Court seeking joint administration of the Chapter 11 Cases under the caption In re Pennsylvania Real Estate Investment Trust, et al. The Debtors will continue to operate their businesses 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. The Plan and requested first-day relief anticipate the continued payment of employee wages and benefits without interruption and that trade claimants and other unsecured creditors that continue to work with the Debtors on existing terms will be paid in full and in the ordinary course of business. The Plan is not expected to have any impact on PREIT’s shareholders, and PREIT common and preferred shares are expected to continue to trade in the normal course, subject to regaining compliance with the New York Stock Exchange trading price listing condition within the applicable grace period.
At the hearing before the Bankruptcy Court held on November 3, 2020 on the Debtors’ motions for first-day relief, customary relief was granted, and the Bankruptcy Court scheduled a combined hearing on the adequacy of the Debtors’ Disclosure Statement and confirmation of the Plan for November 24, 2020.
Additional information about the Chapter 11 Cases is available at http://cases.primeclerk.com/PREIT.
Item 2.04 | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The filing of the Chapter 11 Cases described above in Item 1.03 constitutes an event of default that accelerated the Debtors’ obligations under each of (i) the Seven-Year Term Loan Agreement, dated as of January 8, 2014 (as amended through the date hereof, the “7-Year Term Loan Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”) and the other financial institutions signatory thereto, (ii) the Amended and Restated Credit Agreement, dated May 24, 2018 (as amended through the date hereof, the “Revolving/TL Credit Agreement”) with Wells Fargo and the other financial institutions signatory thereto, and (iii) the Credit Agreement, dated August 11, 2020 (as amended through the date hereof, and together with the 7-Year Term Loan Agreement and the Revolving/TL Credit Agreement, the “Credit Agreements”) with Wells Fargo and the financial institutions signatory thereto and their assignees.
The Credit Agreements provide that, as a result of the filing of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Agreements are automatically stayed as a result of the commencement of the Chapter 11 Cases, and the lenders’ rights of enforcement in respect of the Credit Agreements are subject to the applicable provisions of the Bankruptcy Code.
The commencement of the Chapter 11 Cases and/or acceleration of the Credit Agreements may also constitute a cross-default under certain property-level debt facilities (in an aggregate outstanding principal amount of approximately $896.5 million), ground leases, operating leases and other contractual and non-contractual obligations (collectively, “Non-Debtor Obligations”) of non-Debtor affiliates of the Debtors. The Debtors have filed a motion for the entry of an order extending the automatic stay as a result of the commencement of the Chapter 11 Cases to such non-Debtor affiliates to safeguard the Debtors’ reorganization efforts in the event a counterparty to any of such Non-Debtor Obligations seeks to take adverse action.
Item 7.01 | Regulation FD Disclosure. |
Attached as Exhibit 99.1 to this Current Report on Form 8-K is a copy of PREIT’s press release, dated November 1, 2020, announcing its filing of the Chapter 11 Cases.
Forward Looking Statements
This current report contains certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “project,” “intend,” “may” or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements and results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. Such factors include, but are not limited to, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the RSA; risks attendant to the bankruptcy process, including our ability to obtain court approvals with respect to motions filed in the Chapter 11 Cases, the outcomes of court rulings and the Chapter 11 Cases in general and the length of time that we may be required to operate in bankruptcy; the effectiveness of the overall restructuring activities pursuant to the Chapter 11 Cases and any additional strategies that we may employ to address our liquidity and capital resources; the actions and decisions of creditors, regulators and other third parties that have an interest in the Chapter 11 Cases, which may interfere with the ability to confirm and consummate a plan of reorganization; restrictions on us due to the terms of any interim and final orders that we may seek from the Bankruptcy Court authorizing our use of cash collateral securing the indebtedness under the Bridge Credit Agreement; our ability to achieve forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce indebtedness; our ability to manage our business through the impacts of the COVID-19 pandemic, a weakening of global economic and financial conditions, changes in governmental regulations and related compliance and litigation costs and the other factors discussed in the sections entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit |
Description | |
99.1 | Press Release dated November 1, 2020. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST | ||||||
Date: November 3, 2020 | By: | /s/ Lisa M. Most | ||||
Lisa M. Most | ||||||
Executive Vice President, Secretary and General Counsel |
Exhibit 99.1
PREIT Commences Process to Implement Prepackaged Plan to Strengthen the Business
and Enhance Financial Flexibility
Files Voluntary Petitions for Reorganization Under Chapter 11
Prepackaged Plan Approved by 95% of Voting Lenders
Operations Continuing as Normal;
Court-Supervised Process Expected to Have No Impact on Stakeholders
All Stakeholders Expected to Be Unimpaired and All Claims Paid in Full
PHILADELPHIA, Nov. 1, 2020 PREIT (NYSE: PEI), a leading operator of diverse retail and experiential destinations, today announced it has taken the next step to execute its prepackaged financial restructuring plan (the Prepackaged Plan) under which the Company will be recapitalized and its debt maturities extended. Consistent with the Companys previously announced Restructuring Support Agreement (the RSA), PREIT has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware to implement its Prepackaged Plan.
As previously announced on October 14, 2020, PREIT entered into the RSA with its bank lenders. The banks have committed to provide an additional $150 million to recapitalize the business and extend the Companys debt maturity schedule, supporting PREITs operations and the continued execution of its strategic priorities. Subsequent to executing the RSA, PREIT solicited acceptances of its Prepackaged Plan, which received overwhelming support from 95% of its creditors.
The filing will ensure that PREIT can continue all business operations without interruption while it obtains necessary approvals of its financial restructuring plan. The Companys primary focus remains creating compelling retail and experiential destinations while prioritizing the health and safety of its employees, partners, customers and communities.
We are pleased to be moving forward with strengthening the Companys balance sheet and positioning it for long-term success through our prepackaged plan. We are grateful for the significant support we have received from a substantial majority of our lenders, which we expect will enable us to complete our financial restructuring on an expedited basis, said Joseph F. Coradino, CEO of PREIT. Todays announcement has no impact on our operations our employees, tenants, vendors and the communities we serve and we remain committed to continuing to deliver top-tier experiences and improving our portfolio. With the overwhelming support of our lenders, we look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use ecosystems throughout our portfolio.
PREIT / 2
Not only will PREIT pay all vendors, suppliers and employees during the course of the Chapter 11, but pursuant to the terms of the Prepackaged Plan, which will also be subject to court approval, the prepetition claims of suppliers and other trade creditors and business partners will be unimpaired. The financial restructuring is not expected to have any impact on the Companys shareholders, and PREIT common and preferred shares are expected to continue to trade in the normal course.
PREIT has filed a number of customary first day motions with the court to support its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. The Company expects to receive court approval for these requests.
Additional information, including court documents and information about the court-supervised process, is available on PREITs restructuring website through PREITs claims agent, Prime Clerk at https://cases.primeclerk.com/PREIT.
DLA Piper LLP (US) LLP and Wachtell, Lipton, Rosen & Katz are serving as legal counsel and PJT Partners LP is serving as financial advisor to PREIT.
About PREIT
PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages innovative properties at the forefront of shaping consumer experiences through the built environment. PREITs robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in densely-populated, high barrier-to-entry markets with tremendous opportunity to create vibrant multi-use destinations. Additional information is available at www.preit.com or on Twitter or LinkedIn.
Forward Looking Statements
This press release contains certain forward-looking statements that can be identified by the use of words such as anticipate, believe, estimate, expect, project, intend, may or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current expectations and assumptions regarding our business, the economy and other future events and conditions and are based on currently available financial, economic and competitive data and our current business plans. Actual results could vary materially depending on risks, uncertainties and changes in circumstances that may affect our operations, markets, services, prices and other factors as discussed in the Risk Factors section of our other filings with the Securities and Exchange Commission. While we believe our assumptions are reasonable, we caution you against relying on any forward-looking statements as it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the RSA we have entered into; risks attendant to the bankruptcy process, including our ability to obtain court approvals with respect to motions filed in the chapter 11 cases contemplated by the RSA (the Chapter 11 Cases), the outcomes of court rulings and the Chapter 11 Cases in general and the length of time that we may be required to operate in bankruptcy; the effectiveness of the overall restructuring activities pursuant to the Chapter 11 Cases and any additional strategies that we may employ to address our
PREIT / 3
liquidity and capital resources; the actions and decisions of creditors, regulators and other third parties that have an interest in the Chapter 11 Cases, which may interfere with the ability to confirm and consummate a plan of reorganization; restrictions on us due to the terms of any debtor-in-possession credit facility that we will enter into in connection with the Chapter 11 Cases and restrictions imposed by the applicable courts; our ability to achieve our forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce our indebtedness; our ability to manage our business through the impacts of the COVID-19 pandemic, a weakening of global economic and financial conditions, changes in governmental regulations and related compliance and litigation costs and the other factors listed in our SEC filings. Additionally, our business might be materially and adversely affected by changes in the retail and real estate industries, including consolidation and store closings, particularly among anchor tenants; current economic conditions, including the impact of the COVID-19 pandemic and the steps taken by governmental authorities and other third parties to reduce its spread, and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions; our inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; our ability to maintain and increase property occupancy, sales and rental rates; increases in operating costs that cannot be passed on to tenants; the effects of online shopping and other uses of technology on our retail tenants; risks related to our development and redevelopment activities, including delays, cost overruns and our inability to reach projected occupancy or rental rates; acts of violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales; our ability to sell properties that we seek to dispose of or our ability to obtain prices we seek; our substantial debt and the liquidation preference of our preferred shares and our high leverage ratio and our ability to remain in compliance with our financial covenants under our debt facilities; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all; our ability to raise capital, including through sales of properties or interests in properties and through the issuance of equity or equity-related securities if market conditions are favorable; and potential dilution from any capital raising transactions or other equity issuances.
Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed herein, and in the sections entitled Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
###
PREIT Contact:
Heather Crowell
EVP, Strategy and Communications
(215) 316-6271
heather.crowell@preit.com
Contact:
Andrew Siegel / Meaghan Repko
Joele Frank Wilkinson Brimmer Katcher
212-355-4449
###
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end
K'!B\0$(R"*$33)I^4X,3+)?>VLY-%K,AF,2
M?,\Y8*U/'5:K5\O0<,GISM&LKVR[(]MV0ZJ=A)D_@V@"^>3_A7EVC@P8VF!C
ME6&=?5YR:AF>72C;2#EVOUHV+5^9]M&9]DH)BK2 E4/%9:@I%3@*NYM]WQ#S
M E)*;@8K=TI>9]\KU?;Z;[9C9=/VE9F?FIG/M(Z%>F7I^[%T793V]]SM6-JV
MO9NE'] +=B8F[:!:8?&$R*:/77
M'^LMGI2'>HL0@T>S3]IVIV];6O]3WS,8'^H[0KCDNST?S'4.]MNM\8 :Q V^
MW VW7&KFMQIJV8N2*I]5[ 8J+=VMJ?F_D-DGB:QF0]Q,.O>Y" C'Z\\=JC_N
MI3YGV'! 3EF.;@EV@2:=N4>A);TN,D]C[>[^.: 96)<9*P)1 #P#C!^9,P,@T3 V0"T7EP8XL37 R8LSP(FI 4Y<
M&.#DB 80>G#W,P")B+D%ZMF@FV D-F_YF#W&!UF@G/X2#*"AHY/_U;:W/;QI+]SBK^AREY;RJI(O7P(XDE6;6R'K$2Q=*5Y'BS
MWX; D)P(Q" 8@#3]Z_=T]PP(4+*5N]=R:JLVE2J+XS].G>\#]-S>_GA_L
MOSDY/#[H]_9OSF[.3PY._FOX\N7FSOZ6?,3UK;! [;^^./Y=O?[IZ.+\XNK5
MQOLW9SXP.33,!Z,5D.!SPYTXS532-K.%
MYA65#38V)3M14?@---Z:>WHYGM.$XGJF!QO7,
MY3$\XY"-QC,-*)5WW(@ML;/81;/_Q$'L^1]02P,$% @ &XAC4=95&=O3
M!0 ^S\ !0 !P96DM,C R,#$Q,#%?<')E+GAM;-V;\7/:-A3'?^]=_P?-
M_66[FS$V2=MPI3M*DAVWI.$"[7;[)2?L!^@J2SY))/#?3S+6BL%0TV2C2GX(
M1M9[>M_WD65)V.]^6Z04W8.0A+..%S::'@(6\X2P:<>;2Q_+F! /2859@BEG
MT/&6(+W?WK]\\>XGWT?GE_V/R$