Can Washington Prime Group Inc (WPG) stock do a miracle after filing bankruptcy?

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Washington Prime Group Inc. (WPG) stock plummeted in the morning session on Tuesday, June 15, 2021, and lost 18.05% and close at $2.77 per share. later in the after-hours, WPG did some recovery and gained 3.61% to close the day at $2.87 per share. WPG shares have fallen 69.83% over the last 12 months, and they have moved down 44.60% in the past week. Over the past three months, the stock has lost 4.81%, while over the past six months, it has plunged 72.02%.

WPG filed for Chapter 11 bankruptcy

Washington Prime Group Inc had filed for Chapter 11 bankruptcy on Sunday, June 13, 2021, due to challenges it faced related to the Covid-19 pandemic. Earlier, Washington Prime was able to secure $100 million in new funding to continue operating in the near term which increased hope for its restructuring and emerges from bankruptcy on a more solid financial footing.

Washington Prime has nearly $3.5 billion, to be specific — and it was on the edge of bankruptcy since missing a $23 million interest payment back in March. By reorganizing under Chapter 11, the company can, ideally, convert some of its debt into equity and extend its loan terms.

WPG Financial position

During the first three months of this year, Washington Prime’s rental income reduced roughly $20 million compared with the same time in 2020. Its cash flows from operations for the three months ending in March were $3.3 million, a sharp decline of  $10 million during the same time in 2020.

Recent financial results

On May 10, 2021, Washington Prime Group Inc released its financial and operating results for the first quarter ended March 31, 2021.

Q1 2021 financial results

Washington Prime Group suffered a net loss of $55.4 million, or $2.52per diluted share in Q1 2021, compared to net income of $3.4 million, or $0.16 per diluted share in Q1 2020.

During the first quarter, the Company recorded a non-cash charge of $12.1 million to interest expense upon its discontinuation of hedge accounting effective January 1, 2021. There were no such charges during the same quarter a year ago.

For the reported quarter, FFO was $3.7 million, or $0.15 per diluted share, which compares to $49.7 million, or $1.99 per diluted share, in Q1 2020.

WPG facing several lawsuits and class actions

Many reputable law firms have filed lawsuits and class actions against the WPG group which is creating more problems for the company.

According to the Rosen Law Firmlawsuit, defendants made false and/or misleading statements and/or failed to disclose that Washington Prime Group’s financial condition was deteriorating substantially. as a result, there was substantial uncertainty about the Company’s ability to meet its capital structure obligations.

The Gross Law Firm also announced class action against WPG on behalf of certain shareholders in Washington Prime Group, Inc.

Conclusion

The WPG groups had filed the bankruptcy recently and the company’s future is uncertain. WPG plunge on Tuesday makes sense but its recovery in the after-hours has no grounds at all.

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