The owner of Lakewood’s Colorado Mills mall warned Tuesday that it could be forced into bankruptcy by March 31 if it is unable to sell all or part of the company to repay a $1.1 billion loan.
The Chevy Chase, Md.-based shopping mall developer and operator also revealed the results of an investigation into its accounting practices that will force it to restate its earnings from 2001 through 2004 and the first three quarters of 2005.
The errors are expected to decrease shareholder equity by $347 million to $352 million and were attributed to accounting mistakes and possible misconduct.
The Mills Corp. is saddled with heavy debt and has previously said it is trying to sell itself. It received a buyout offer from an Israeli firm in October, but analysts say other potential suitors have been waiting on the company’s financial restatements to determine its value.
In Tuesday’s filing with the U.S. Securities and Exchange commission, Mills said it may not have the money to pay off the $1.1 billion loan unless it can recapitalize itself or sell all or part of its assets.
If it is forced into bankruptcy, the company said in the filing, shareholders “could lose their entire investment.”
News of a possible bankruptcy came as little surprise to Lakewood City Manager Mike Rock. He has previously said that problems at Mills Corp. have led the company to neglect its responsibilities at Colorado Mills.
The Lakewood mall has been meeting financial expectations, and sales were up 2.67 percent in November, Rock said, but Mills Corp. did not bring in the type of tenants it promised. It also has neglected the site of a former auto dealership that it purchased but never redeveloped.
“At the local level, this corporate floundering doesn’t seem to have any great effect, but it underscores that we’ll probably have a new owner for (Colorado Mills) at some point,” he said.
Rock said he remains confident that Colorado Mills is a highly marketable property.
In a filing Friday, Mills Corp. said it has entered an agreement with partner Kan Am regarding multiple co-ventures.
As part of the agreement, Mills said it would contribute $25.5 million to match Kan Am’s investment in Colorado Mills.
Shares of Mills Corp. dropped 21 percent to close at $14.82 Tuesday.
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
