Simon attracts more co-investors for General Growth
Simon Property Group Inc. continues sweetening its offer to be among the investors who help reorganize shopping-mall owner General Growth Properties Inc.
Yesterday, Indianapolis-based Simon sent General Growth a letter outlining the advantages to its offer. Simon also said that five investors have joined its team by agreeing to provide $2.1 billion of a $3.8 billion equity-rights offering at $10 a share. Simon will backstop the remainder.
In addition to the $2.5 billion that Simon would invest in place of Brookfield Asset Management Inc., Simon will backstop a $1.5 billion credit agreement that must be in place for General Growth to implement its contemplated reorganization plan. Simon will require no fees for the backstop and no warrants for being in the group that would provide the equity investment in the reorganization.
Simon says that the forgone warrants are worth $895 million. To entice unsecured creditors, Simon said it would allow not only post-bankruptcy interest, but also default-rate interest where applicable.
Bruce Berkowitz from Fairholme Capital Management LLC sent General Growth a letter yesterday saying it is "not willing to invest in GGP if equity ownership is concentrated in the hands" of Simon, "passive or not."
The General Growth case is unusual in how ordinarily behind-the-scenes negotiations are being conducted through press releases and regulatory filings.
To read about the reorganization structure proposed by General Growth in late March based on the $6.55 billion investment from the three potential plan sponsors.
Simon reiterated the advantages to its offer in a court filing yesterday in opposition to approval of bidding procedures and the granting of warrants to the three investors. The official committees representing unsecured creditors and stockholders filed opposition papers, too, likewise opposing the warrants. To read Bloomberg coverage, click here.
General Growth has a hearing on April 29 to approve warrants for the stalking-horse investors that Simon believes are unnecessary. The judge at the same hearing is to decide on a schedule for completing the reorganization. Initial bids were to have been submitted by April 19, allowing General Growth's board time to decide which bid to support in advance of the hearing.
General Growth has tentative plans for a July 30 hearing for approval of a disclosure statement and a confirmation hearing for approval of a plan on Sept. 30.
In seven batches of confirmations since December, General Growth formally reorganized and implemented Chapter 11 plans for property-owning subsidiaries with $12 billion in debt. In addition to the holding company, plans for subsidiaries with $1.8 billion in debt remain to be formally reorganized.
General Growth began the largest real estate reorganization in history by filing under Chapter 11 in April 2009. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008. The company owns or manages more than 200 shopping-mall properties.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).