Washington Prime sinks after withholding interest payment on notes

Washington Prime Group is sinking after the company elected to withhold an interest payment of $23.2M due on February 15, 2021 with respect to its outstanding senior notes due 2024. Under the indenture governing the notes, Washington Prime has a 30-day grace period to make the interest payment before such non-payment constitutes an “event of default” with respect to the notes.

If an “event of default” should occur, the trustee or the holders of at least 25% of the notes could accelerate the outstanding indebtedness due under the notes, making such indebtedness due and payable, which would result in a cross-default with respect to some of the company’s other indebtedness, Washington Prime disclosed this morning in a regulatory filing.
The company has engaged Kirkland & Ellis as legal counsel and Guggenheim Securities as investment banker to assist it and its subsidiaries with respect to their continuing discussions with certain counter parties as well as other lenders within the company’s capital structure. Washington Prime intends to use the aforementioned 30-day grace period to further said discussions. The company expects to continue to operate in the ordinary course. Shares of Washington Prime Group are down 33%, or $4.04, to $8.04 in afternoon trading.

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