General Growth Properties Files Amended Plan of Reorganization and Investment Agreements
August 02 2010 - 11:19PM
Business Wire
General Growth Properties, Inc. (NYSE: GGP) today announced it
has filed an Amended Plan of Reorganization, Disclosure Statement
and amended Investment Agreements with the United States Bankruptcy
Court for the Southern District of New York.
As previously announced, the Investment Agreements with
affiliates of Brookfield Asset Management, Fairholme Capital
Management and Pershing Square Capital Management (“Sponsors”)
provide $8.55 billion of capital commitments to GGP in connection
with its plan for emergence from Chapter 11. In addition, the
Teacher Retirement System of Texas, a public pension plan, has
agreed to invest $500 million in shares of New GGP common stock at
$10.25 per share, which will replace the Sponsors’ $500 million
equity backstop.
The key modifications to the Plan of Reorganization and
Investment Agreements include:
- Reinstatement of $1.3 billion of
Rouse Bonds due in 2012 and 2013. GGP’s emergence financing needs
will be satisfied in part by the reinstatement of these bonds, so
the company does not expect to need the previously contemplated
term loan.
- Enhancement of the clawback
feature of the Investment Agreements, which gives GGP the ability
to issue equity at higher prices and retire a portion of the
lower-priced equity in the Investment Agreements, to extend the
length of GGP’s clawback right after the company emerges from
bankruptcy. In addition, $350 million of Pershing Square’s shares
will be available for clawback for a period of 180 days after
emergence. In order to facilitate the extension of Pershing
Square’s clawback, $350 million of Pershing Square’s initial
investment will be in the form of a note rather than equity. In the
event these shares are not clawed back from Pershing Square, the
Company has the option to retire the note by putting to Pershing
Square 35 million shares at a price of $10.00 per share.
- Conversion of the $250 million
backstop equity commitment for a rights offering by Spinco to a
$250 million stock purchase by the Sponsors at closing. The price
of the stock has been set at the economically neutral price of
$4.76 per share, reflecting the originally contemplated backstop
investment at $5.00 per share, net of fees associated with the
original rights offering. This modification is expected to provide
greater immediate liquidity to Spinco and allow the company to
avoid the need for short-term financing.
- Consent to a sale at closing by
the Sponsors of up to $500 million of their allocated equity to an
affiliate of The Blackstone Group on a pro rata basis. The closing
commitments of each of the Sponsors are unaffected by these equity
sales to Blackstone.
- These modifications provide more
flexibility to GGP in managing its capital structure.
“We are very pleased with our ability to continue to enhance the
Investment Agreements and our capital structure for the benefit of
the company and its stakeholders,” said Thomas Nolan, president and
chief operating officer of GGP. “The amended clawback rights
enhance our ability to sell $1.9 billion of equity at higher prices
than committed by the Sponsors in the original Investment
Agreements, market conditions permitting. We have also improved our
flexibility to manage our balance sheet and access the capital
markets. We remain on track to emerge from Chapter 11 in October
and continue to build on our leadership position in the industry.
At the same time, these modifications enhance Spinco’s ability to
maximize value for its stakeholders.”
The full Amended Plan of Reorganization and accompanying
Disclosure Statement can be found at
http://www.ggp.com/content/Docs/reorganizationAmended08022010.pdf.
The Bankruptcy Court has set the hearing to consider approval of
the Disclosure Statement for August 19, 2010, at 10:00 am EDT.
Following Bankruptcy Court approval of the Amended Disclosure
Statement and related voting solicitation procedures, GGP will
solicit acceptances of the Plan and seek its confirmation by the
Bankruptcy Court.
UBS Investment Bank and Miller Buckfire & Co. LLC are
serving as financial advisors to General Growth Properties, and
Weil, Gotshal & Manges LLP and Kirkland & Ellis LLP are
acting as legal counsel to the Company.
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.
NOTE
With respect to GGP’s efforts to raise equity capital to replace
some or all of the Pershing Square, Fairholme and Texas Teachers
commitments, as noted, the Company has filed a registration
statement relating to these securities with the Securities and
Exchange Commission. The securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement
becomes effective. This press release does not constitute an offer
to sell these securities.
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, our ability to successfully complete our plan of
reorganization and emerge from bankruptcy, our ability to
refinance, extend, restructure or repay our near and intermediate
term debt, our substantial level of indebtedness, our ability to
raise capital through equity issuances, asset sales or the
incurrence of new debt, retail and credit market conditions,
impairments, our liquidity demands and retail and economic
conditions. 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.
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