Mills Says High Debt Could Force Bankruptcy
The Mills Corp. warned that a heavy debt load could force the mall developer into bankruptcy if it is unable to follow through with its plans to sell all or part of the company.
The warning came in a Securities and Exchange Commission filing that also detailed the results of an internal audit showing accounting errors and possible executive misconduct.
Mills' shares plunged almost 18% on the news.
Chevy Chase-based Mills said it may not have enough cash to continue operating beyond March 31 and that it would be forced to sell all or part of the company to pay off a $1 billion loan that is due on that date. It could be forced into bankruptcy, which would cause shareholders to "lose their entire investment," the company wrote in the federal filing.
Mills is looking for a buyer while it works to restate its earnings due to accounting errors. In past filings, Mills has said it has some possible suitors, and the Israeli real estate firm Gazit-Globe has already made a bid.
Mills took out a $1.5 billion loan from Goldman Sachs Mortgage last May to help it stay afloat. The loan was originally due Dec. 28, but Mills was able to negotiate an extension through March 31.