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Mills Corp. Gets Big Loan Pact

Goldman puts together $2.23 billion for a refinancing.

Updated from 9:24 a.m. EDT

Mills Corp.


has refinanced its debt in a move to provide financial flexibility. But the news also raises questions about whether management might be looking to scrap plans to sell the company.

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The embattled mall developer, which is currently restating its financials for the past several years, announced the $2.23 billion refinancing late Wednesday.

The company is currently exploring a sale of itself or assets and is facing numerous shareholder lawsuits and an


investigation related to its ongoing restatements. Goldman Sachs, which is advising Mills in exploration of a sale, also provided the company with the financing.

Recently, several hedge funds have

taken large stakes in Mills. The company has axed its dividend and

laid off much of its development staff.

The new financing consists of a senior term loan of up to $1.48 billion and first-mortgage loans totaling $746 million.

The recapitalization means either that Mills' management and board doesn't want to sell, or that the company is trying to gain financial flexibility so it doesn't look desperate to prospective buyers, Bank of America analyst Ross Nussbaum wrote in a research note.

"We believe the shares could come under pressure near-term until the company's true intentions are made known, as short-term holders who were expecting an imminent sale of the company and investors fearing a dilutive equity infusion may exit the stock. We continue to support our valuation range of $29-$34 (official price target of $32), but would need to revisit this range should asset sales or an equity issuance occur," Nussbaum wrote.

Mills also said it named a new head of development to take the place of Jim Dausch, who

recently left the company, but didn't identify the replacement.