Alberta's Popular Mega-Mall Gets Squeezed by Mega-Debt

THE West Edmonton Mall in Edmonton, Alberta, is the world's biggest shopping extravaganza - complete with dolphins, a submarine fleet, ice rink, wave pool, and amusement park among 800-plus stores. It is also skating near bankruptcy.

With 5.2 million square feet (120 acres), the mall is at once spectacle and plastic paradise to 1.7 million shoppers and gawkers each year. Once billed as the eighth wonder of the world, it is Alberta's largest tourism generator, netting $1.2 billion (Canadian; US$87 million) in 1991. Japanese tourists may come to see the Canadian Rockies - but they also stop and shop at the West Edmonton Mall.

Despite its ability to draw crowds, the Edmonton ``megamall'' has not been able to rescue its owners from the megadebt load of a high-interest-rate (11.3 percent) $300 million mortgage.

On Monday, after months of speculation, the privately held Triple Five Corporation of Edmonton, which owns the mall, missed a crucial deadline to repay the $300 million mortgage, its main creditor reported. Company officials were unavailable for comment.

Talks are now under way between Triple Five's partners - Edmonton's four Ghermezian brothers: Bahman, Nader, Eskander, and Raphael - and the Toronto finance company Gentra Inc., which holds about one-third of the mall mortgage debt and represents 22 other institutions.

Other West Edmonton Mall creditors include the province of Alberta, which some estimate is owed $80 million, and a Montreal trust company that is owed another $50 million. Earlier this year, one partner revealed that 87 percent of the mall's $45 million cash flow is absorbed by debt repayment.

The Ghermezians are still partners in the 400-store Mall of America in Bloomington, Minn., which opened in 1992. That complex, which boasts a seven-acre amusement park, is the biggest shopping mall in the United States.

But the cash crisis imperiling the Ghermezian's mall in Edmonton has put on hold much grander plans to build similar ``mega-malls'' in Germany, Britain, China, Russia, and Niagara Falls, N.Y.

Retailing, too, is shifting away from the ``megamall'' idea toward ``power strip mall'' centers with a few big discount super stores all in one bunch, says H. Clifton Young, a retailing expert at the University of Alberta, who wrote a research paper on the West Edmonton Mall.

``If you have an entertainment mall set up with ice skating, a fantasy land, and movie theaters, a number of people are going to show up who have no reason to shop,'' Prof. Young says.

``You simply increase the amount of clutter and traffic and only spend a little on popcorn. This is not so good for the guys trying to sell merchandise,'' he adds.

No one seriously questions that the mall will continue to operate, even if its owners lose control of it or go into bankruptcy. It is even possible that a new owner acquiring the property with less debt could do quite well, analysts suggest.

But whether or not the mall is a financial success, its many attractions are impressive to visitors from abroad.

``There's no mall like this I've ever been to,'' says Chris Chang, an 18-year-old visiting from New York City, gazing out from a balcony overlooking swimmers and waves breaking over a concrete beach.

``It's great,'' he gushes. ``They have everything here. I took in a dolphin show. I didn't even know about the wave pool until today. I would have brought my swim suit.''