General Growth Announces Commencement of Bondholder Consent Solicitation
March 09 2009 - 8:06PM
Business Wire
General Growth Properties, Inc. (NYSE:GGP) (the �Company�)
announced that its subsidiary, The Rouse Company LP (�TRCLP�),
launched a solicitation today to obtain consents from the holders
of TRCLP�s unsecured notes (five series with an aggregate
outstanding principal amount of approximately $2.25 billion at
December 31, 2008) to forbear from exercising remedies with respect
to various payment and other defaults under the notes through
December 31, 2009.
�This is a significant step in our ongoing efforts to reach a
plan with our lenders to develop a long-term solution to the
Company�s maturing debt� said Adam Metz, Chief Executive Officer.
�We developed this forbearance working together with the financial
and legal advisors to an ad hoc committee of holders of TRCLP Notes
the members of which hold, in the aggregate, approximately 41% of
TRCLP Notes.
The material terms of the forbearance are as follows:
- Consenting holders of TRCLP�s
3.625% Notes due March 15, 2009, and TRCLP�s 8% Notes due April 30,
2009, would agree to forbear from exercising their remedies with
respect to TRCLP�s failure to pay such notes at scheduled
maturity.
- Consenting holders of the 3.625%
Notes due March 15, 2009 and the 8% Notes due April 30, 2009, as
well as of TRCLP�s 7.20% Notes due 2012, its 5.375% Notes due 2013
and its 6.75% Notes due 2013, would agree to forbear from
exercising their remedies with respect to TRCLP�s failure to pay
cash interest on these notes during the forbearance period
(interest would continue accrue on such notes at the applicable
contractual rate but will not be paid in cash and instead would be
added to the principal amount of the notes).
- Consenting holders would agree
to forbear from exercising their remedies with respect to certain
other potential defaults and cross-defaults under the indentures
governing the TRCLP Notes.
- Consenting holders of all series
of TRCLP Notes would receive a quarterly consent fee of $0.625 in
cash for each $1,000 principal amount of notes.
- TRCLP would agree to
restrictions on various actions, including restrictions on certain
fundamental changes, incurrence of debt and liens, asset sales and
issuances of capital stock by subsidiaries, dividends and other
restricted payments and investments, transactions with affiliates,
as well as limitations on certain kinds of capital
expenditures.
- TRCLP would also agree to
provide the representative of the ad hoc committee with certain
information, including cash flow budgets, business plans and terms
sheets for a comprehensive restructuring plan (to include
out-of-court and in-court restructuring alternatives) and will
undertake to work with the ad hoc committee�s advisors to commence
implementation of such a restructuring plan.
- It is intended that the
forbearance arrangement become effective on March 16, 2009 and
would continue in effect through December 31, 2009 unless
terminated early in accordance with its terms. Termination events
would include certain bankruptcy events relating to TRCLP, breaches
by TRCLP of its obligations under the forbearance agreement,
certain cross-default events relating to other debt obligations of
TRCLP and GGP, and the failure of GGP and TRCLP to reach agreement
with the ad hoc committee on the terms of a comprehensive
restructuring plan by the end of July 2009.
- Conditions to the effectiveness
of the forbearance arrangement include the following minimum
acceptance levels for each series of the Notes: 90% for the 3.625%
Notes due March 15, 2009 and the 8% Notes due April 30, 2009; 75%
for the 7.20% Notes due 2012, the 5.375% Notes due 2013 and the
6.75% Notes due 2013.
- The consent solicitation will
expire at 5:00 p.m. (New York City time) on March 16, 2009, unless
extended in accordance with the terms of the solicitation.
The Company noted that the forbearance agreement will not be
binding on non-consenting holders, and non-consenting holders will
not be entitled to receive the consent fee. The Company also stated
that it does not intend to make any payments of principal or
interest with respect to any TRCLP Notes, including those held by
non-consenting holders, during the forbearance period, and that,
non-consenting holders will continue to have whatever rights and
remedies are available to them under the indentures governing the
TRCLP Notes and applicable law.
The Company also stated that it was working with the lenders
under its 2006 Corporate Credit Agreement ($1.99 billion term loan
and $590 million revolving credit facility at December 31, 2008) to
obtain an extension of the forbearance agreement currently in place
with respect to that facility through December 31, 2009 on terms
that are similar to those in the forbearance agreement with the
holders of TRCLP Notes. It is a condition precedent to the
effectiveness of the forbearance agreement for the TRCLP Notes that
such a forbearance for the Corporate Credit Agreement be in
place.
Notwithstanding this significant progress, GGP and TRCLP
continue to be in default on substantial amounts of debt, some of
which has already matured. As previously stated in the Company�s
Annual Report on Form 10-K for the year ended December 31, 2008, as
of December 31, 2008, GGP had $1.18 billion in past due debt and
additional $4.09 billion of debt that could be accelerated by its
lenders. This amount does not include the TRCLP notes or an
additional approximately $340 million of project-level debt that
has become due in March 2009. This debt, combined with credit
market conditions and other risks associated with the Company�s
financial difficulties (which are described in detail in the
Company�s SEC filings), pose a significant threat to the Company�s
liquidity. As a result, the Company has concluded that it is
prudent to defer cash interest payments on its unsecured corporate
debt obligations for the remainder of 2009 to provide liquidity
while attempting to negotiate a consensual restructuring of its
balance sheet. The consent solicitation seeking forbearance from
the holders of the TRCLP Notes and the discussions with the lenders
under the 2006 Corporate Credit Agreement are elements of the
Company�s attempt to implement this strategy. The Company
anticipates entering into discussions with its other major
unsecured creditor groups, including the holders of the Company
3.98% Exchangeable Senior Notes ($1.55 billion outstanding at
December 31, 2008) and the trust preferred securities issued by GGP
Capital Trust I ($200 million outstanding at December 31, 2008)
concerning forbearances similar to that contemplated by the consent
solicitation for the TRCLP Notes in the near future if the consent
solicitation is successful.
However, if the Company is unable to obtain forbearances from
these creditor groups, or if substantial amounts of the Company�s
debt are accelerated as a result of a default, the Company may be
forced to seek protection under the Bankruptcy Code.
GGP INFORMATION/WEBSITE
General Growth is a U.S. based, publicly traded Real Estate
Investment Trust. The Company currently has an ownership interest
in, or management responsibility for, more than 200 regional
shopping malls in 44 states, as well as ownership in master planned
community developments and commercial office buildings. The Company
portfolio totals approximately 200 million square feet of retail
space and includes over 24,000 retail stores nationwide. The
Company is listed on the New York Stock Exchange under the symbol
GGP. For more information, please visit the Company Web site at
www.ggp.com.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Actual
results may differ materially from the results suggested by these
forward-looking statements, for a number of reasons, including, but
not limited to, a potential bankruptcy filing, our ability to
refinance, extend or repay our near and intermediate term debt, our
substantial level of indebtedness and interest rates, retail and
credit market conditions, impairments, land sales in the Master
Planned Communities segment, the cost and success of development
and re-development projects and our ability to successfully manage
our strategic and financial review and our liquidity demands.
Readers are referred to the documents filed by General Growth
Properties, Inc. with the Securities and Exchange Commission, which
further identify the important risk factors which could cause
actual results to differ materially from the forward-looking
statements in this release. The Company disclaims any obligation to
update any forward-looking statements.
This press release is not an offer of securities for sale or an
offer to purchase securities or a solicitation of consents. The
consent solicitation is being made by means of a Consent
Solicitation Statement that may be obtained by contacting Financial
Balloting Group LLC, which is acting as the Information Agent for
the Consent Solicitation, at (646) 282-1800.
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