Industry News
General Growth Nabs $4 Billion to Fend Off Simon
(DAILY FINANCE) - Mall operator General Growth Properties (GGP), which is currently in bankruptcy, has been fighting an unsolicited $10 billion bid from rival Simon Property Group (SPG). Now it looks like General Growth has a viable alternative for its investors. The company has secured nearly $4 billion to recapitalize its balance sheet.
The backers are General Growth’s largest unsecured creditor, Fairholme Capital Management, and Pershing Square Capital Management, which is the biggest shareholder. These firms will also each invest $62.5 million in a rights offering to fund the spin-off of General Growth Opportunities, which holds riskier assets.
At the same time, General Growth has $2.6 billion in backing from Brookfield Asset Management.
Adding things up, General Growth will be able to pay off the $7 billion in outstanding unsecured debt and also offer $10 per share for the equity. The company will have time to work out the details as the bankruptcy court has allowed four more months for the reorganization.
Mall Wars
When General Growth declared bankruptcy in April 2009, the situation seemed dire. The company had a strong portfolio of malls across the country but an upside-down capital structure, which included a crushing $27 billion debt load.
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