GENERAL GROWTH FILES $6.55 BILLION PLAN TO EXIT BANKRUPTCY

General Growth Properties Inc., the second-largest U.S. mall owner, said it has an agreement to reorganize with $6.55 billion from Brookfield Asset Management Inc., Pershing Square Capital Management LP and Fairholme Capital Management LLC, according to a statement.

Brookfield, Pershing Square and Fairholme will commit $6.55 billion of new equity capital at a value of $15 a share to facilitate the company’s emergence from bankruptcy, General Growth said in a statement yesterday. The company will also issue warrants for 120 million shares exercisable at $15 a share, subject to approval in U.S. Bankruptcy court, according to the statement.

The financing plus a new $1.5 billion debt issuance would provide all the cash needed to fulfill the company’s capital needs, General Growth said.

Unsecured creditors would receive par plus accrued interest and existing shareholders would get 34 percent ownership in the reorganized company and 86 percent equity in a newly formed entity called General Growth Opportunities. The new company will own real estate properties, including South Street Seaport in New York, whole General Growth Properties will concentrate on shopping malls, according to the statement.

The proposal calls for $2.8 billion from Fairholme, General Growth’s largest bondholder; $1.1 billion from Pershing Square; and $2.62 billion from Brookfield.

The company will continue to explore other alternative deals, said Adam Metz, Chief Executive Officer, in the statement.

“This proposed transaction represents an important step toward our goal of creating the greatest value for all our stakeholders,” said Metz.

Chicago-based General Growth, which has also weighed a bid from Simon Property Group Inc., has until July 15 to file a disclosure statement outlining the exact terms of a reorganization plan. The reorganization is for its holding company, referred to as TopCo. Most of the company’s property- owning subsidiaries have already been reorganized, as it exits bankruptcy in stages. About $14 billion out of $15 billion worth of property loans have won approval to exit bankruptcy, company lawyer Anup Sathy said at a March 26 hearing.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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