Mills Corporation, the US shopping centre REIT that made a failed attempt to break into the UK and Europe, is teetering on the brink of bankruptcy.
The firm this week admitted for the first time that it may not have the funds to continue trading past 31 March. It said it could be forced into bankruptcy if it was unable to pay back a $1bn (£510m) loan due on that date.
In a statement to the US Securities & Exchange Commission, Mills said: “There is a risk that the company could be forced to seek protection under the US Bankruptcy Code and that the security holders of the company could lose their entire investment.
“Moreover, cash projected to be generated by operations and potential peripheral land sale will not be sufficient to permit the company to execute our business plan beyond 31 March.”
Mills took out the loan from Goldman Sachs Mortgage Company in May last year in a bid to stay afloat.
That loan was originally due on 28 December but the firm was able to negotiate a three-month extension.
In a bid to recoup its losses, the shopping centre giant is getting ready for a full sale.
To make itself a more attractive proposition, it has recently disposed of a number of poorer-performing assets, including its 50% stake in the 1m sq ft St Enoch shopping centre in Glasgow.
Several rival shopping centre developers, including Westfield and Israeli property firm GazitGlobe, are understood to have already approached the company.
The revelation came as the group concluded a lengthy internal investigation that will force it to restate earnings from 2001 to 2004 and the first nine months of 2005.
Mills had planned a £1bn push into the UK and Europe but was forced to retreat last year after spending just over £500m in the region.
References: EGi News 15/01/07
