General Growth Properties Submits Revised $6.55 Billion Investment & an Additional $2 Billion Backstop Offer From Brookfield,...
May 03 2010 - 3:30PM
Business Wire
General Growth Properties, Inc. (NYSE: GGP) announced today that
it will seek Bankruptcy Court approval of bidding procedures and
compensation for the financial commitments to be provided pursuant
to a revised $6.55 billion equity investment and $2 billion capital
backstop offer from Brookfield Asset Management, Pershing Square
Capital Management and Fairholme Funds. The Company will continue
to consider competitive proposals and expects to select its plan
for emergence from bankruptcy in early July.
“We are very pleased to recommend the Brookfield-led proposal as
the transaction that offers the best opportunity at this time to
maximize long-term value for stockholders while ensuring full
payment to creditors,” said Adam Metz, Chief Executive Officer of
GGP. “With the revised proposal, we have now secured commitments
for all financing needed to emerge from bankruptcy. The
Brookfield-led proposal also allows the Company to continue its
process to solicit higher and better offers pursuant to the bid
procedures to be approved by the Bankruptcy Court.”
The Official Committee of General Growth's Equity Committee
supports the revised Brookfield-led proposal and the relief
requested in the motion. The investment offer remains subject to
higher and better offers pursuant to a bidding process that is
subject to approval by the Bankruptcy Court.
Terms of the Revised
Brookfield-Led Proposal
Under the terms of the amended agreements, the Company expects
to emerge from Chapter 11 as two separate companies: General Growth
Properties (“New GGP”), which will own traditional shopping mall
properties, and General Growth Opportunities (“GGO”), which will
own a diverse portfolio of assets with attractive longer-term
growth prospects. The investors would commit $6.3 billion of new
equity capital at a value of $10.00 per share for New GGP and $250
million to backstop a rights offering for GGO at $5.00 per share to
facilitate GGP’s emergence from bankruptcy.
The principal changes from the original proposal submitted by
the Brookfield-led investors include:
- The investors have agreed to
backstop an additional $2.0 billion of capital to be raised at
closing, including $1.5 billion of debt and a $500 million equity
rights offering;
- The interim warrants to be
issued to the investment parties as part of the transaction will
vest over time rather than immediately as follows:
- 40% upon Bankruptcy Court
approval
- 20% on July 12
- Remainder would continue to vest
pro rata through expiration of commitment;
- The permanent warrants will
include 120 million 7-year warrants for reorganized GGP stock at a
strike price of $10.50 and 80 million 7-year warrants for GGO at a
strike price of $5.00; and
- Brookfield has agreed to enter
into a strategic relationship agreement to use GGP as its primary
platform for any regional mall opportunities it or its affiliates
pursue in North America;
- Several closing conditions were
eliminated or made less restrictive.
“We are pleased to reach this agreement with Brookfield,
Pershing Square and Fairholme and view this as a critical step to
create long-term value for the Company and its stockholders,” said
Thomas H. Nolan, Jr., President and Chief Operating Officer of GGP.
“Combined with the announcement last week that GGP has received
approval to restructure substantially all of its secured mortgage
indebtedness, we are well on our way to emerging from bankruptcy by
the fall and beginning the next successful chapter for GGP and
GGO.”
UBS Investment Bank and Miller Buckfire & Co., LLC served as
financial advisors to General Growth Properties, and Weil, Gotshal
& Manges LLP acted as legal counsel to the company.
ABOUT GGP
GGP currently has ownership interest in or management
responsibility for more than 200 regional shopping malls in 43
states, as well as ownership in planned community developments and
commercial office buildings. The Company’s portfolio totals
approximately 200 million square feet of retail space and includes
over 24,000 retail stores nationwide. The Company’s common stock is
traded on the New York Stock Exchange under the symbol GGP.
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