GREAT NECK, N.Y., Nov. 14 /PRNewswire/ -- Feldman Mall Properties, Inc. (BULLETIN BOARD: FMLP) announced today that it has entered into a letter agreement with Inland American Real Estate Trust, Inc. ("Inland") pursuant to which Feldman will repurchase from Inland 2,000,000 shares of 6.85% Series A Cumulative Convertible Preferred Stock (the "Series A Preferred Stock"). In exchange, Inland will receive title to the Stratford Square Mall, located in Bloomingdale, Illinois, Northgate Mall, located in Cincinnati, Ohio, and the Golden Triangle Mall, located in Denton, Texas (collectively, the "Malls"), subject to the mortgage indebtedness secured by the Malls. Inland will also deliver to the Company $9.125 million in cash representing the amount by which the value of the Malls, subject to the outstanding indebtedness, exceeds the value of the Series A Preferred Stock. This letter agreement is subject to the approvals of the Boards of Directors of both the Company and Inland.
Upon the completion of this transaction, the Company will own interests in four retail malls: (i) Harrisburg Mall, located in Harrisburg, Pennsylvania, (ii) Colonie Center Mall, located in Albany, New York, (iii) Foothills Mall, located in Tucson, Arizona and (iv) the Tallahassee Mall, located in Tallahassee, Florida, which was placed in receivership as of November 12, 2008 as described below.
Management believes that, if the Company is able to complete this transaction with Inland, it will have sufficient cash to allow it (i) to close the transactions under the Securities Purchase Agreement (the "Redemption Agreement") which it entered into with Kodiak CDO I, Ltd. and Kodiak CDO II, Ltd. (collectively, the "Sellers") on November 3, 2008 to redeem from the Sellers 28,500 preferred securities of FMP Statutory Trust I, a Delaware statutory trust and an indirect subsidiary of the Company, having an aggregate liquidation amount of $28.5 million (the "TruPS"), and (ii) to redeem and retire $29.38 million in aggregate principal amount of the unsecured fixed/floating rate junior subordinated notes issued by the Company's operating partnership subsidiary due April 2036 (the "Junior Notes"), which are held by FMP Statutory Trust I.
If the Company is unable to complete the transaction, the Company will continue to own the Malls, and it will not receive the cash component of the Inland Transaction. The Company will therefore lack the resources to redeem the TruPS and retire the Junior Notes and they will remain outstanding. In such an event, the Company will need to raise sufficient additional capital or negotiate appropriate modifications to existing debt arrangements in order to continue to fund its on-going operations. The current economic and business environment makes the achievement of any such alternative transactions especially difficult and there can be no assurance that any such transactions will be completed.
In addition, the Company has concluded its negotiations with the first mortgage lender for the Tallahassee Mall and a receiver was appointed to operate the property on behalf of the lender and to release the Company from further obligations and benefits arising out of the Company's ownership of this property. As previously announced in the Company's Form 10-Q for the quarter ended June 30, 2008, it recorded a $45.7 million impairment charge for the Tallahassee Mall, and based on this write-down, its cost basis in the Tallahassee Mall was written down to a level which is below the current principal balance that is outstanding on the Tallahassee non-recourse first mortgage of $44.2 million. The appointment of the receiver is subject to judicial approval.
The Company's Board of Directors determined, as part of a series of on-going cost savings measures, to terminate, on or prior to November 14, 2008, the Company's obligations to file periodic and other reports as a reporting company under the Securities Exchange Act of 1934, as amended. As a result, the shares of common stock of the Company will no longer be quoted on the Over-the-Counter Bulletin Board. The Company will continue to have its shares of common stock quoted on Pink OTC Markets, a privately owned company formerly known as Pink Sheets, which operates Pink Quote. The Company will continue to provide quarterly and annual financial information and other material information relating to the Company to its stockholders.
About Feldman Mall Properties, Inc.
The Company's portfolio, including non-owned anchor tenants and excluding the Tallahassee Mall, consists of six regional malls aggregating approximately 5.8 million square feet. For more information on Feldman Mall Properties Inc., visit the Company's website at http://www.feldmanmall.com/.
