The Mills Corporation (NYSE:MLS) may be recapitalized with an additional $1.2 billion by Gazit-Globe Ltd, according to a 13D/A filing with the SEC. Many investors are concerned that the company may sell itself at its current prices, which are significantly lower than historical levels. This new recapitalization offer would allocate enough money for the company to rebuild itself and recover some of its lost value. Investors applauded the idea as the stock moved up 14% today on the news.

A letter filed with their 13D/A gave more details:

"Chaim Katzman, Gazit-Globe’s chairman, said his company’s goal is to recapitalize what it views as a struggling Mills Corporation, and that it is prepared to 'invest up to $1.2 billion into Mills' in accordance with the terms outlined in the Schedule 13D that Gazit has filed with the Securities and Exchange Commission [seen below].

'It is not a question of whether or not the board must take action to ensure the continuity of Mills in order to restore profitability and leadership in the industry,' said Katzman, 'but rather what kind of action is necessary and appropriate.'

'At this point it is clear to us that an outright sale of the company is not in the best interests of shareholders,' continued Katzman. “We’re urging the Mills’ board of directors in the strongest terms possible to consider our recapitalization proposal.'

'We believe Mills can and should be rebuilt, and not sold,' said Katzman, who added that his recent discussions with Mills leadership left him concerned that the company might elect to simply sell itself at a distressed price. 'We have helped build and rebuild companies over the years. We know how to take companies such as this and re-energize them so that maximum shareholder value is achieved.'" (Read More)

In an earlier filing, they detailed the capitalization amounts and other considerations:

"As you are aware, we are also a significant stockholder in the Company with an approximate 4.9% [now 9%] ownership interest. Due to our ownership position, we are not in a position at this stage in the process to execute the confidentiality agreement the Company has circulated as a precondition to obtaining material non-public information. Rather, we strongly encourage the Company to make all relevant financial and other information public as soon as possible so that we, and other potential bidders who may have similar issues to ours, may participate in the bidding process and enhance stockholder opportunities to achieve the best value for the Company.

Based upon our extensive review of the currently available public information, and, as discussed below, our in-depth property analysis, we are prepared to recapitalize the Company by investing new capital in the form of common stock. The cash amount would be up to $1.2 billion at a price per share of $24.50. This new common stock would be classified as Series B and would entitle Gazit to a majority of the seats on the Company’s board. The new common stock would also be convertible into the currently outstanding series of common stock. This new investment would be in addition to our current holdings of the Company's common stock." (Read More)

This is definitely a stock to keep an eye on as this situation unfolds. If Gazit-Globe is successful in recapitalizing the company and rebuilding shareholder value it could mean a significant return in the medium-term.

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