General Growth Properties to Receive $500 Million Equity Investment from Teacher Retirement System of Texas
July 12 2010 - 9:13AM
Business Wire
General Growth Properties, Inc. (NYSE:GGP) and The Teacher
Retirement System of Texas (TRS), manager of one of the largest and
most successful U.S. pension funds, today announced they have
entered into a definitive agreement whereby TRS will invest $500
million in exchange for equity in reorganized GGP at $10.25 per
share. This agreement, subject to Bankruptcy Court approval,
enhances GGP’s expected capital structure on emergence from Chapter
11.
GGP’s initial investment agreements with Brookfield Asset
Management, Fairholme Funds and Pershing Square Capital Management,
which provide sufficient capital for the company to emerge from
Chapter 11, include a backstop provision for $1.5 billion of debt
and $500 million of equity required for emergence. Since completing
these agreements, GGP has continued to explore alternative
financing options to maximize the equity value of the company upon
emergence. GGP’s agreement with TRS is the result of that
process.
“The equity investment by TRS is yet another vote of confidence
in the future of GGP,” said Adam Metz, chief executive officer of
General Growth Properties, Inc. “We are excited to partner with
such an experienced and highly regarded real estate investor that
has a proven track record of long-term investments. Although we
previously obtained sufficient capital commitments to enable us to
emerge from Chapter 11, this transaction expands and diversifies
our ownership base on attractive terms and preserves our ability to
continue to seek more favorable equity investments. We continue to
make excellent progress with our restructuring plan and are well on
our way to exiting Chapter 11 by October of this year.”
“We are very pleased to make this significant equity investment
in GGP,” said Steve LeBlanc, senior managing director, Private
Markets of The Teacher Retirement System of Texas. “We believe our
investment in GGP offers us a unique opportunity to obtain a
significant position in a large and diversified portfolio of
high-quality assets with a solid capital structure, an excellent
management team and clear operating strategy. We believe GGP is
very well positioned to create substantial long-term value.
Investing in GGP is consistent with TRS’s strategy of making
well-diversified investments designed to produce solid long-term
results while managing risks appropriately.”
The TRS investment will be in the equity of reorganized GGP only
and will not include any interest in the newly formed company to be
spun-off to GGP shareholders upon emergence.
Full text of the motion submitted today to the U.S. Bankruptcy
Court is available at
http://www.ggp.com/content/Docs/teachers_motion.pdf
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 on the
transaction.
ABOUT GGP
GGP currently has ownership interest and 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
more than 24,000 retail stores nationwide. The Company’s common
stock is traded on the New York Stock Exchange under the symbol
GGP.
ABOUT TEACHER RETIREMENT SYSTEM OF TEXAS
TRS delivers retirement and related benefits authorized by the
Texas Legislature and manages the $96.7 billion trust fund
established to finance member benefits. Nearly 1.3 million public
education and higher education employees and retirees participate
in the system.
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, the bankruptcy filings of the debtors not currently
emerging from bankruptcy, our ability to refinance, extend,
restructure or repay our near and intermediate term debt, our
substantial level of indebtedness, our ability to implement a plan
or plans of reorganization for the remaining debtors to emerge from
bankruptcy, our ability to raise capital through equity issuances,
asset sales or the incurrence of new debt, retail and credit market
conditions, impairments, land sales in the Master Planned
Communities segment, 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 that 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.
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