MLS Mills Corp

Agreement Expected to Generate Net Proceeds of Approximately $385 Million, Provide Options to Increase Shareholder Value The Mills Corporation (NYSE:MLS), a developer, owner and manager of a diversified global portfolio of retail destinations, today announced that it has obtained a commitment from Goldman Sachs Mortgage Company (GSMC) to provide it with financing of up to $2.23 billion. The commitment, the latest in a series of initiatives by the Company intended to boost its liquidity and flexibility, consists of a senior term loan of up to approximately $1.484 billion and first-mortgage facilities totaling approximately $746 million. The senior term loan carries an interest rate of LIBOR plus 225 basis points, subject to upward adjustment if certain specified contingencies are not met. The first-mortgage facilities would carry various fixed and floating interest rates. The Goldman Sachs commitment is subject to a number of contingencies, including the receipt of certain third party consents, due diligence and the absence of certain material adverse changes with respect to The Mills or the financial markets. The commitment is described in a Form 8-K filed by the Company today with the Securities and Exchange Commission. If the financing is consummated, the proceeds will be used to repay the outstanding debt under the Company's line of credit and term loans and fund certain property-level debt. The remaining proceeds, estimated to be approximately $385 million after the payment of estimated transaction fees and expenses payable at the closing of the facilities and before the establishment of an interest reserve escrow, would be used to provide for working capital requirements and general corporate purposes in accordance with an approved budget. The senior term loan, which would be secured and recourse to the Company and certain of its subsidiaries, would have a maturity of December 31, 2006 with two extension alternatives. As detailed in the Form 8-K filed today, one alternative could provide extensions to June 30, 2007, subject to the fulfillment of certain conditions, while an alternative option would permit the extension of the loan to June 30, 2008 if certain conditions, including a pay-down of the senior term loan of at least $850 million, are met. Either extension would require, among other things, the Company to have filed its Form 10-K for 2005 and meet certain projected liquidity requirements. "This financing commitment is part of a series of important initiatives we have implemented in the past several months. We believe this financing commitment would provide us with greater flexibility than our existing facilities," said Chairman and CEO Laurence C. Siegel. "As we continue to pursue the exploration of strategic alternatives, this facility would provide us with additional liquidity as we continue to run our business." In the past several months, The Mills Corporation has: -- Hired Goldman, Sachs & Co. and JP Morgan to advise the Company on the exploration of strategic alternatives. The Company has in place a process that includes the distribution of confidential information and a web-based data room through which alternatives for enhanced shareholder value may be pursued. -- Restructured operations, including workforce reductions of more than 150 people. -- Hired a new chief operating officer and executive vice president of finance and accounting, bolstering operations and financial reporting capabilities. -- Welcomed a new head of development to oversee our developments and redevelopments, including the continued construction progress at Meadowlands Xanadu and 108 North State Street. -- Bolstered the Company's governance by establishing an oversight committee of the Board of Directors that works closely with management. -- Opened Colonnade Outlets at Sawgrass, which is now 92% leased. The 110,000 square-foot open-air promenade includes market-exclusive, high-end luxury outlet retailers, a day spa and fine restaurants. David Yurman, Feraud/Rosch and Vilebrequin are among the outlet stores making their U.S. debuts. The Colonnade Outlets also features Burberry Outlet, Kate Spade New York, Malo, Valentino and Stuart Weitzman. -- Made substantial progress in redevelopment projects at Del Amo Fashion Center and The Shops at Riverside, the first phases of both of which are expected to open this fall. Del Amo will add AMC 18 Theatres, Anthropologie, Aveda Day Spa, Cohiba, Crate & Barrel, Eddie Bauer, Levi's, Lucky Strike Lanes, P.F. Chang's, RA Sushi, Urban Outfitters and others. The Shops at Riverside, a 248,000 square-foot expansion and redevelopment, will include the relocation of the Bloomingdale's Home Store to a new 75,000 square-foot site adjacent to the north side of the existing Bloomingdale's store, the reconfiguration of the former Bloomingdale's Home Store space for approximately 30 new retail shops and signature restaurants, and a 97,000 square-foot expansion wing will be added to connect the Bloomingdale's Home Store and a new 856-space parking deck. -- Recently signed or opened major anchors include Neiman Marcus Last Call at Arundel Mills and Great Mall, Best Buy at Arundel Mills, Cabela's at St. Louis Mills, Boscov's at Marley Station, Steve and Barry's at Franklin Mills and Cincinnati Mills, Children's Place at Potomac Mills and Grapevine Mills, Medieval Times at Discover Mills, and Nike is opening stores at five Mills locations. About The Mills Corporation The Mills Corporation, based in Arlington, Virginia, is a developer, owner and manager of a diversified global portfolio of retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. It currently owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction. The Mills is traded on the New York Stock Exchange under the ticker: MLS. For more information, visit the company's website at www.themills.com. Statements in this press release that are not historical may be deemed forward-looking statements within the meaning of the federal securities laws. Although The Mills Corporation believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. The Mills Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and its annual reports on Form 10-K for a discussion of such risks and uncertainties. No assurance can be given that the proposed financing will be completed. There also can be no assurance that the exploration of strategic alternatives will result in any transaction.