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Mills Shares Rise on Credit Deal

The revised pact with lenders may force the retail property owner to sell all or part of itself.

April 13, 2006|From Reuters

NEW YORK — Retail property owner Mills Corp., wrestling with accounting issues and a federal investigation, Wednesday said it may be forced to sell part or all of itself under an amended credit agreement with its lenders.

The agreement allows Arlington, Va.-based Mills to continue to borrow the balance of an existing $1-billion credit facility and meet its development capital requirements. But it also requires it to cut its first-quarter dividend by more than half and could force Mills to sell itself should certain provisions not be met by certain dates.

The company disclosed the new agreement in a filing with the Securities and Exchange Commission. Mills shares jumped 15.1%, or $3.98, to close at $30.33 on Wednesday. Mills shares were the top percentage gainer on the New York Stock Exchange.

"The information out today suggests that the company may be forced to liquidate, so there's speculation about the liquidation," said Amos Rogers, managing director of Tuckerman Group, which sold Mills shares last quarter.

In February, Mills said it had retained Goldman Sachs & Co. and J.P. Morgan Securities Inc. as financial advisors to explore strategic alternatives, including a possible sale. The move came after the company said that when it filed its 2005 yearly statements, it would also restate its financial results going back to 2000.

The company has yet to file those restatements or its 2005 results.

The new agreement with lenders led by JPMorgan Chase allows Mills to tap into the $341 million left on an existing $1-billion revolving credit facility, according to the filing.

To secure the waivers and funds, Mills had to pledge most of its assets as security. The lenders could terminate the loan at the end of August if Mills overspent by more than $50 million -- unless Mills reached an agreement to sell most or all of the company.

The agreement also requires Mills to cut its first-quarter dividend on its common shares to about 25 cents versus the prior quarter's payout of nearly 63 cents a share.

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