UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 31, 2010
GENERAL
GROWTH PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-11656
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42-1283895
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(Commission File Number)
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(IRS Employer Identification No.)
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110 N. Wacker Drive, Chicago, IL
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60606
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(Address of Principal Executive Offices)
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(Zip Code)
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(312) 960-5000
(Registrants Telephone Number, Including Area Code)
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions.
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item
1.01. Entry into a Material Definitive
Agreement.
As
previously reported, commencing on April 16, 2009, General Growth
Properties, Inc. (GGP) and certain of GGPs domestic subsidiaries
(collectively, the Debtors) filed voluntary petitions for relief under Chapter
11 of Title 11 of the United States Code (Chapter 11) in the United States
Bankruptcy Court for the Southern District of New York (the Bankruptcy
Court).
In
connection with the Debtors efforts to implement a joint Chapter 11 plan of
reorganization, on March 31, 2010, GGP entered into:
·
a Cornerstone Investment Agreement (the
Cornerstone Agreement) with REP Investments LLC (REP), an affiliate of
Brookfield Asset Management Inc.,
·
a Stock Purchase Agreement (the Fairholme
Agreement) with The Fairholme Fund and Fairholme Focused Income Fund
(collectively, Fairholme); and
·
a Stock Purchase Agreement (the Pershing
Agreement and, together with the Cornerstone Agreement and the Fairholme
Agreement, the Investment Agreements) with Pershing Square Capital
Management, L.P. on behalf of Pershing Square, L.P., Pershing Square II, L.P.,
Pershing Square International, Ltd. and Pershing Square International V, Ltd.
(collectively Pershing and, together with REP and Fairholme, the
Investors).
The
Investment Agreements contemplate GGP filing with the Bankruptcy Court a joint
Chapter 11 plan of reorganization of the Debtors consistent with the terms of
the Investment Agreements and the Plan Summary Term Sheet attached thereto (the
Proposed Plan). The Investment
Agreements are subject to the approval of the Bankruptcy Court, and
consummation of the transactions contemplated by the Investment Agreements is
subject to various other conditions, as discussed below.
The
Investment Agreements contemplate, among other things, the following in
connection with consummation of the Proposed Plan:
·
A restructuring of GGP in accordance with the
Investment Agreements (the Restructuring) whereby, among other things,
existing shares of common stock of GGP (Common Stock) would be exchanged
(subject to adjustments contemplated by the Investment Agreements) for shares
of common stock (New Common Stock) of a new company that would succeed to GGP
in the Restructuring (the Reorganized Company).
·
An investment by REP of $2,500,000,000, by
Fairholme of $2,714,285,710, and by Pershing of $1,085,714,286, in the
Reorganized Company through a purchase of shares of New Common Stock from the
Reorganized Company at a purchase price of $10 per share (provided that, (i) subject
to certain limitations, these purchase
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commitments may be satisfied through the conversion of allowed claims
against the Debtors held by the applicable Investor into shares of New Common
Stock at a valuation of $10 per share; and (ii) if GGP has sold or has
binding commitments to sell shares of New Common Stock at a price not less than
$10.50 per share, GGP has the option to reduce the amount of New Common Stock
to be sold to Fairholme and Pershing, pro rata, but not by more than 50%).
·
The distribution to GGPs stockholders (the
Spinco Distribution) of shares of common stock of a company which GGP would
form and to which GGP would contribute certain assets and liabilities as
described in the Investment Agreements (Spinco).
·
An offering by Spinco to its stockholders of
rights to purchase an aggregate of 50,000,000 shares of Spinco common stock at
a purchase price of $5 per share. REP
would receive a minimum allocation of 10,000,000 shares of Spinco common stock,
and Fairholme and Pershing together would receive a minimum allocation of
10,000,000 shares of Spinco common stock, in the rights offering at the
purchase price of $5 per share.
·
A commitment by REP to backstop 50%, and
commitments by Fairholme and Pershing to each backstop 25%, of the $250,000,000
Spinco rights offering described above at the purchase price of $5 per
share. REP would be issued 1,250,000
shares of Spinco common stock, and Fairholme and Pershing together would be
issued 1,250,000 shares of Spinco common stock, in consideration for providing
these backstop commitments.
·
The board of directors of the Reorganized
Company would have nine members, three of whom would be designated by REP and
one of whom would be designated by Pershing.
Pershings right to designate directors would only apply to the initial
board of directors. REPs right to
designate three directors would continue so long as REP beneficially owns at
least 20% of the New Common Stock on a fully diluted basis, with such right
reducing to (a) two directors if REP beneficially owns between 15% and 20%
of the New Common Stock on a fully diluted basis and (b) one director if
REP beneficially owns between 10% and 15% of the New Common Stock on a fully
diluted basis (with no right to designate a director if REP beneficially owns
less than 10% of the New Common Stock on a fully diluted basis).
·
The board of directors of Spinco would have
nine members, two of whom would be designated by REP
(provided that if the chief executive officer of Spinco is an
employee of REP, such individual shall be one of the two REP designees)
and two of whom
would be designated by Pershing. REPs
right to designate two directors would continue so long as REP has
not sold any Spinco shares (or Spinco warrants described below),
with such right reducing to one director following the sale by REP
of any Spinco
shares or Spinco warrants
so long
as REP
beneficially owns
at least
10% of the Spinco common stock
on a fully diluted
basis. Pershings right to
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designate two directors would continue so long as Pershing beneficially
owns at least 10%
of the Spinco
common stock
on a fully diluted basis. Following such time as REP, or Pershing, as
applicable, owns less than 10% of the Spinco common stock on a fully diluted
basis, the applicable Investor would no longer have the right to designate
directors for election to the Spinco board of directors.
·
Following consummation of the Proposed Plan,
each Investor would have a right to purchase in offerings of New Common Stock
and Spinco common stock as necessary to allow them to maintain their respective
proportionate ownership interests in the Reorganized Company and Spinco on a
fully diluted basis.
·
Non-Control Agreements of the Investors
with respect to the Reorganized Company (and, in the case of Pershing, also
with respect to Spinco) would be entered into addressing, among other things (a) the
size of, the minimum number of independent directors on, and the composition of
the nominating committee of, the applicable companys board of directors, (b) voting
for directors and certain other matters, (c) required approvals for (i) certain
change in control transactions and related-party transactions involving the
applicable Investor and (ii) the applicable Investor to increase its
percentage ownership in the applicable company above an agreed cap, and (d) transfers
of shares of the applicable company by the Investor.
·
The Investors would be granted registration
rights with respect to their securities in the Reorganized Company and Spinco.
Pursuant
to the Investment Agreements, on March 31, 2010 GGP filed a motion (the
Approval Motion) with the Bankruptcy Court seeking Bankruptcy Court approval
to issue an aggregate of 120,000,000 warrants (the Warrants) to the Investors
(60,000,000 to REP, 42,857,143 to Fairholme and 17,142,857 to Pershing). Each of the Warrants would entitle the holder
thereof to purchase one share of Common Stock at an initial exercise price of
$15 per share, subject to adjustment as provided in the related warrant and
registration rights agreement. Upon the
effectiveness of the Proposed Plan, the 120,000,000 Warrants would be exchanged
for and converted into the right to receive an aggregate of (a) 120,000,000
warrants each of which would entitle the holder to purchase one share of New
Common Stock at an initial exercise price of $10 per share, subject to
adjustment as provided in the underlying warrant agreement, and (b) 80,000,000
warrants each of which would entitle the holder to purchase one share of Spinco
common stock at an initial exercise price of $5 per share, subject to
adjustment as provided in the underlying warrant agreement. Each warrant would have a term of seven years
from the date of issuance. The warrants (i) are
subject to anti-dilution adjustments in connection with dividends and certain
other events, (ii) provide for a right to require that the warrants be
cashed out at a Black-Scholes-based formula value upon certain change in
control events and (iii) provide registration rights.
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The
obligation of the Investors to purchase New Common Stock pursuant to the
Investment Agreements is subject to various conditions set forth in the
Investment Agreements, including, among others, the following conditions:
·
The Proposed Plan, in form
and substance satisfactory to the Investors, shall have been confirmed by the
Bankruptcy Court by order in form and substance satisfactory to the Investors.
·
The Spinco Distribution
shall have occurred and the Restructuring shall have been consummated.
·
The Reorganized Company shall have a
specified minimum amount of liquidity.
·
Debt of the Reorganized Company shall not
exceed a specified cap.
·
The number of shares of New Common Stock and
Spinco common stock shall not exceed specified caps.
·
With respect to the issuance or sale of
Common Stock prior to the closing, subject to certain exceptions, (i) Common
Stock shall not have been issued or sold at a price of less than $10 per share,
(ii) no person, entity or group (other than an Investor) shall, after
giving effect to such issuance or sale of Common Stock, beneficially own more
than 10% of the Common Stock on a fully diluted basis, and no five persons,
entities or groups (other than Investors and certain other specified entities)
shall, after giving effect to such issuance or sale of Common Stock,
beneficially own more than 30% of the Common Stock on a fully diluted basis,
and (iii) the right to purchase up to 15% of any shares of Common Stock
issued or sold shall have been offered to (a) REP and (b) Fairholme
and Pershing.
·
The issuance, if applicable, of a promissory
note by Spinco to GGP in an amount equal to the excess of GGPs net debt (as of
the effective date of the Proposed Plan) above a specified cap plus any amounts
paid by GGP in settlement of certain specified claims less certain credits for
equity issuances and other specified amounts.
Pursuant
to the Investment Agreements, the Investment Agreements (and the obligations of
the parties thereunder) terminate automatically if:
·
an order, in form and substance satisfactory
to the Investors, approving the issuance of the Warrants is not entered by the
Bankruptcy Court on or prior to May 13, 2010; or
·
the Debtors withdraw the Approval Motion;
in
each case, unless Investors and GGP otherwise agree in writing.
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In
addition, an Investment Agreement may be terminated, among other things:
·
if the effective date of the Proposed Plan
and the closing of the Investors purchase of New Common Stock has not occurred
by December 31, 2010 (which date may be extended by GGP to any date on or
prior to January 31, 2011 if the Bankruptcy Court enters a confirmation
order in respect of the Proposed Plan (a Confirmation Order) on or before December 15,
2010);
·
by the Investor if (a) the Warrants are
not issued in accordance with the Investment Agreements following Bankruptcy
Court approval, or the shares underlying the Warrants cease to be listed, (b) prior
to the issuance of the Warrants, GGP makes a public announcement, enters into
an agreement or files any pleading or document with the Bankruptcy Court, in
each case, evidencing its decision to support any competing transaction, or
enters into a definitive agreement providing for a competing transaction, (c) GGP
consummates a competing transaction, or (d) the conditions to the
Investors obligation to close cannot be satisfied;
·
by GGP, for any reason or no reason, prior to
the entry of a Confirmation Order; and
·
in the case of the Cornerstone Agreement, by
GGP if as of the 20th day following the date of the Cornerstone Agreement, REP
has not (i) received an executed equity commitment letter from Brookfield
Asset Management Inc. in the form attached to the Cornerstone Agreement (the
Brookfield Equity Commitment Letter), and (ii) entered into escrow
agreements with members of REP pursuant to which such members of REP shall have
deposited into an escrow account such funds, or posted letters of credit, that
when taken together with the commitment contemplated by the Brookfield Equity
Commitment Letter shall be sufficient in the aggregate to pay the purchase
price payable by REP pursuant to the Cornerstone Agreement.
The
Investment Agreements, including Exhibit G thereto (the form of warrant
and registration rights agreement), are exhibits hereto and are incorporated
herein by reference. The foregoing
summary of certain provisions of these documents is qualified in its entirety
by reference thereto. The above
descriptions of these documents and the copies of these documents included as
exhibits hereto have been included to provide investors with information
regarding the terms of these documents.
These documents contain representations and warranties made by and to
the parties thereto as of specific dates.
The representations and warranties of each party set forth in each
document have been made solely for the benefit of the other party to such
document. In addition, such
representations and warranties (1) may have been qualified by confidential
disclosures made to the other party in connection with such document, (2) may
be subject to a materiality standard which may differ from what may be viewed
as material by investors, (3) were made only as of the date of such
documents or such other date as is specified therein and (4) may have been
included in such documents for the purpose of allocating risk between or among
the parties thereto rather than establishing matters as facts. Accordingly, these documents are included
herewith only to provide investors with
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information
regarding the terms thereof, and not to provide investors with any other
factual information regarding the parties or their respective businesses.
Item
3.02. Unregistered Sales of Equity
Securities.
The
information set forth in Item 1.01 hereof is incorporated herein by reference.
Item
3.03. Material Modification to Rights of
Security Holders.
The
information set forth in Item 1.01 hereof is incorporated herein by
reference. The Investment Agreements
provide that, prior to the issuance of the Warrants, the Rights Agreement,
dated as of November 18, 1998, by and between GGP and BNY Mellon
Shareowner Services, as successor to Norwest Bank Minnesota, N.A., as amended
on November 10, 1999, December 31, 2001 and November 18, 2008
(the Rights Agreement), shall be amended to provide that (a) the Rights
Agreement is inapplicable to (i) the acquisition by the Investors of the
Warrants and the underlying securities thereof, (ii) any anti-dilution
adjustments to those Warrants pursuant to the underlying warrant agreement, (iii) any
shares of New Common Stock that an Investor may be deemed to own by no actions
of its own and (iv) up to an additional 2.5%, 1.786% and 0.714% of the
issued and outstanding shares of Common Stock by REP, Fairholme and Pershing,
respectively, (b) no Investor shall be deemed to be an Acquiring Person
(as defined in the Rights Agreement), (c) neither a Shares Acquisition
Date (as defined in the Rights Agreement) nor a Distribution Date (as defined
in the Rights Agreement) shall be deemed to occur and (d) the Rights (as
defined in the Rights Agreement) shall not separate from the Common Stock, in
each case under (b), (c) and (d), as a result of the acquisition by the
Investor of the Warrants, the underlying securities thereof and the acquisition
of beneficial ownership of up to the additional shares of Common Stock referred
to in (a)(iv) above.
Item
8.01. Other Events.
On
March 31, 2010, GGP issued a press release announcing the execution of the
Investment Agreements. The press release
is an exhibit hereto and is incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
10.1
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Cornerstone
Investment Agreement, dated as of March 31, 2010, between REP
Investments LLC and General Growth Properties, Inc.
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10.2
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Stock
Purchase Agreement, dated as of March 31, 2010, between the Purchaser
Party thereto and General Growth Properties, Inc.
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10.3
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Stock
Purchase Agreement, dated as of March 31, 2010, between the Purchaser
Party thereto and General Growth Properties, Inc.
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99.1
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Press Release titled
General Growth Properties Files Motion To Seek Approval Of Proposed $6.55
Billion Investment From Brookfield, Pershing Square and Fairholme dated
March 31, 2010.
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8
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
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GENERAL
GROWTH PROPERTIES, INC.
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By:
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/s/Edmund Hoyt
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Name:
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Edmund Hoyt
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Title:
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Senior Vice President and
Chief Financial Officer
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Dated: April 6, 2010
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Exhibit
Index
10.1
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Cornerstone
Investment Agreement, dated as of March 31, 2010, between REP
Investments LLC and General Growth Properties, Inc.
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10.2
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Stock
Purchase Agreement, dated as of March 31, 2010, between the Purchaser
Party thereto and General Growth Properties, Inc.
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10.3
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Stock
Purchase Agreement, dated as of March 31, 2010, between the Purchaser
Party thereto and General Growth Properties, Inc.
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99.1
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Press Release titled
General Growth Properties Files Motion To Seek Approval Of Proposed $6.55
Billion Investment From Brookfield, Pershing Square and Fairholme dated
March 31, 2010.
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10
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