Troubled Mills Corp. Gets Default Waiver
May 1, 2006 12:00 PM
For Mills Corp., April brought another milestone — and not a good one.
In early April, the company received waivers through Dec. 31 with respect to defaults on construction loans at Pittsburgh Mills, Cincinnati Mills, St. Louis Mills and Discover Mills. Simultaneously, the company arranged a $625 million mortgage on its Sawgrass Mills property.
Mills is also planning on refinancing Madrid Xanadu and Vaughan Mills. Lastly, it cut its first-quarter dividend to $0.251 per common share for its shareholders and cut dividends on a series of its preferred shares.
The arrangements buy Mills some time , giving it breathing room to continue operations as the market waits for the company to restate its earnings and for the outcome of an ongoing SEC investigation.
Sharks keep circling
Meanwhile, potential buyers continue to jockey. In addition to Vornado Realty Trust, which declared interest in Mills, Taubman Centers Inc. has mentioned the possibility of buying some properties, particularly ones it co-owns with Mills. Also, hedge fund Farallon Partners LLC bought 3,177,800 shares, a 5.6 percent stake in the troubled company. And, just a month after it ran up its stake in the company, Fidelity Investments sold 5.7 million shares in Mills. It had built up a 10 percent stake in the company, but reversed course as more troubles have come into the open. It did not fare well on the flip having purchased the shares when they were trading at $40 per share and selling after they had fallen below $27 per share.
In early April, Mills also announced 70 more layoffs. It was the third time that Mills announced position cuts since it first hit troubles. The first wave eliminated 17 officers and a second batch wiped out 77 jobs.
Mills also confirmed that Jim Dausch, the company's president of development, will leave the company effective May 2. Dausch is one of the main driving forces behind Mills' proposed Meadowlands Xanadu project. The company said that Dausch will serve as a consultant on the project.
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