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CHEVY CHASE, MD-After a last minute delay last year, Mills Corp. has announced that it has completed its investigation into several accounting issues, the results of which were detailed in a Form 8-K filed with the SEC. Mills will restate financial statements for 2001 through 2004 and the first three quarters of 2005.
The SEC filing states that Mills will more accurately state the company's interest capitalization, indirect project cost capitalization, capitalization of direct leasing origination costs, grand opening and market costs, evaluation of predevelopment project and acquired construction in progress, and empire tract transfer among other things.
In the SEC filing, Mills says it expects to have enough cash to meet obligations through March 31 after the refinancing procedures that should take place during this quarter. But the company adds a warning, "The March 31, 2007 maturity date places significant restriction on the company and Mills LP and requires them to sell sufficient assets to pay-off the senior term loan, to recapitilaize or sell the company." It goes on to say if Mills is unable to do this by the end of March it could be forced to "seek protection under the US Bankruptcy Code and that security holders of the company and Mills LP could lose their entire investment."
Mills has previously expected to file this paperwork in October 2006 as reported by GlobeSt.com. However the investigation turned out to be more complex than expected.
Gibson, Dunn & Crutcher LLP, the Audit Committee's independent counsel, helped conduct the investigation, which included reviewing more than four million pages of documents and interviews of nearly 100 people. Thus far the Audit Committee has reported its findings to the board of directors, to outside auditor Ernst & Young and to the SEC, which continues its own investigation into Mills. Company officials were not available for comment in time for publication.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
