General Growth Properties Inc. 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 an article by Tiffany Kary and Karen Gullo at Bloomberg.com today, that will give the three investors a 65 percent stake in the second-largest U.S. mall owner.
General Growth filed a request in Manhattan bankruptcy court yesterday seeking approval of the proposal April 29 as part of a procedure to auction itself to the highest bidder, the article said, adding that it plans to file a plan of reorganization around July 2, and will give its stakeholders the chance to evaluate higher and better offers while avoiding risks from changes in the financial markets.
The company, it continued, will continue to explore other alternative deals, said Adam Metz, Chief Executive Officer, in a separate statement, adding that "This proposed transaction represents an important step toward our goal of creating the greatest value for all our stakeholders."
"The financing proposal," according to the article, "will give Brookfield 26 percent ownership for its $2.625 billion investment, Fairholme a 28 percent stake for its $2.8 billion investment, and Pershing an 11 percent stake for its $1.1 billion investment. The investors will be paid by receiving warrants, exercisable for 120 million shares at a price of $15."
The financing plus a new $1.5 billion debt issuance will provide all the cash needed to fulfill the company's capital needs, General Growth said in a statement. Unsecured creditors, according to the article, 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, where it planned to erect a new tower, shown at the right, while General Growth Properties will concentrate on shopping malls, according to the statement.
Chicago-based General Growth, which has also weighed a bid from Simon Property Group Inc., was given by U.S. Bankruptcy Judge Allan Gropper until July 15 to file a disclosure statement outlining the exact terms of a reorganization plan.
Most of the company's property-owning subsidiaries have already been reorganized, as it exits bankruptcy in stages and the article noted that a company lawyer, Anup Sathy, said last week that about $14 billion out of $15 billion worth of property loans have won approval to exit bankruptcy.
The General Growth proposal filed today would give creditors from Aug. 6 to Sept. 17 to vote on a plan of reorganization, and seek final court confirmation to exit Chapter 11 on Sept. 30.
General Growth filed a request in Manhattan bankruptcy court yesterday seeking approval of the proposal April 29 as part of a procedure to auction itself to the highest bidder, the article said, adding that it plans to file a plan of reorganization around July 2, and will give its stakeholders the chance to evaluate higher and better offers while avoiding risks from changes in the financial markets.
The company, it continued, will continue to explore other alternative deals, said Adam Metz, Chief Executive Officer, in a separate statement, adding that "This proposed transaction represents an important step toward our goal of creating the greatest value for all our stakeholders."
"The financing proposal," according to the article, "will give Brookfield 26 percent ownership for its $2.625 billion investment, Fairholme a 28 percent stake for its $2.8 billion investment, and Pershing an 11 percent stake for its $1.1 billion investment. The investors will be paid by receiving warrants, exercisable for 120 million shares at a price of $15."
The financing plus a new $1.5 billion debt issuance will provide all the cash needed to fulfill the company's capital needs, General Growth said in a statement. Unsecured creditors, according to the article, 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, where it planned to erect a new tower, shown at the right, while General Growth Properties will concentrate on shopping malls, according to the statement.
Chicago-based General Growth, which has also weighed a bid from Simon Property Group Inc., was given by U.S. Bankruptcy Judge Allan Gropper until July 15 to file a disclosure statement outlining the exact terms of a reorganization plan.
Most of the company's property-owning subsidiaries have already been reorganized, as it exits bankruptcy in stages and the article noted that a company lawyer, Anup Sathy, said last week that about $14 billion out of $15 billion worth of property loans have won approval to exit bankruptcy.
The General Growth proposal filed today would give creditors from Aug. 6 to Sept. 17 to vote on a plan of reorganization, and seek final court confirmation to exit Chapter 11 on Sept. 30.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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