Prime Retail Executes Term Sheets for $110 Million Financing and Retains Lehman Brothers as Its Financial Advisor
BALTIMORE, June 21 /PRNewswire/ -- Prime Retail, Inc. (NYSE: PRT - news, PRT.PRA - news, PRT.PRB - news; the ``Company'') announced today that it has reached agreement with Lehman Brothers to obtain up to $110 million in financing. The proposed financing would consist of (i) a $90 million loan partially secured by mortgages on, and pledges of equity interests in, certain outlet centers, with the remainder unsecured, and (ii) a $20 million mortgage loan on the Company's outlet center in Puerto Rico which is scheduled to formally open in July. The mezzanine loan will be LIBOR based, be for a term of two years (with a one-year extension), require fixed amortization each month and be pre-payable at any time. In addition, Lehman Brothers will be granted warrants to purchase common stock of the Company. The Puerto Rico mortgage loan will also be LIBOR based, be for a one-year term and require no amortization during the term.
The Company also announced that it has retained Lehman Brothers as its financial advisor. The Company chose Lehman Brothers because it is a recognized leader in providing strategic advice to real estate companies. Additionally, they are one of the largest arrangers and providers of debt and equity to the real estate industry. ``The addition of Lehman Brothers to our team will strengthen our efforts to restructure our debt and reduce our leverage in order to financially stabilize the Company and ultimately develop and implement strategies that enhance shareholder value,'' said Glenn D. Reschke, president and chief executive officer of the Company.
The proceeds from these loans will be used to pay off up to $84 million of short term debt, with the remainder to be used for general corporate purposes, including the funding of programs to attract and retain tenants through increased marketing and capital improvements. Simultaneous with the completion of the proposed financing, the Company intends to modify the covenants under an existing debt obligation and has been working with Lehman Brothers and the existing lender to arrange for the necessary modifications. At the time of funding the Company expects to be in full compliance with all of its debt obligations. Closing on the loans from Lehman Brothers is subject to customary conditions as well as the other lender's agreement to the proposed loan modifications. The Company expects that the financing will be completed within the next 30-60 days.
Commenting on the proposed financing, Mr. Reschke said, ``The financing from Lehman Brothers provides the Company with the capital needed to restructure and extend the maturity of our short term debt. The stabilization of our financial condition will allow us to use cash flow from our outlet centers to reduce the debt over time. Additional time will also allow us to pursue, on a more selective basis, the sale of some of our assets in order to reduce the overall leverage of the Company. Finally, this financing allows us to continue to implement our strategic plan which focuses on improving occupancy at all of our centers by increasing sales and traffic for our tenants.'' |
