Mills Corp. has received a commitment letter from Goldman Sachs to provide up to $2.23 billion of financing, according to a filing with the Securities and Exchange Commission. The package is comprised of floating- and fixed-rate credit facilities totaling $746 million and a secured term loan. The troubled retail real estate investment trust will use the financing to pay debt and for general corporate purposes. Calls to Goldman were not returned and a spokesman at Mills declined further comment.
Pricing on the term loan portion of the financing is set at LIBOR plus 225 basis points. The pricing is higher than investment-grade corporate debt but lower than the rate for the highest-risk companies, market participants noted.
The new package comes a month after Mills received waivers of default from its bank group through December 31, 2006. The Arlington, Va.-based REIT is also obtaining waivers and standstill agreements on construction loans at Pittsburgh Mills, Cincinnati Mills, St. Louis Mills and Discover Mills.
Before receiving the commitment from Goldman, Mills had said it was funding its business through the net proceeds of property level refinancings, including a new $625 million loan from JP Morgan Chase for Sawgrass Mills to replace an existing $286 million mortgage. The REIT obtained $74 million in mezzanine financing that is also secured by Sawgrass Mills.
Goldman and JP Morgan also are helping the REIT explore its options in the wake of an SEC investigation into the company’s finances and accounting. Mills has laid off 150 people, including its chief operating officer and its longtime head of new development. Goldman Sachs could provide extensions to June of 2008 if Mills pays down at least $850 million for term loan and if the company restates it earnings for 2005 in time.