General Growth Properties Plan of Reorganization Confirmed by Court
October 21 2010 - 12:33PM
Business Wire
General Growth Properties, Inc. (NYSE: GGP) today announced
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York confirmed the Company’s plan of
reorganization. GGP expects to emerge from Chapter 11 restructuring
on or about the 8th of November.
GGP will emerge from its financial restructuring with a strong
balance sheet and substantially less debt, providing it with a
solid financial foundation on which to execute its growth strategy.
Upon emergence, GGP will have a significantly improved capital
structure, having secured $6.8 billion in equity commitments from
Brookfield Asset Management, Fairholme Funds, Pershing Square
Capital Management, Blackstone and The Teacher Retirement System of
Texas. GGP has also successfully and consensually restructured
approximately $15 billion in project-level debt, renegotiating
terms and extending maturity dates. In addition, all pre-petition
GGP creditors will be satisfied in full.
"The confirmation of our plan is an important milestone as we
lay the groundwork for a successful future for GGP. We secured
equity commitments from four highly respected investment firms and
one of the most admired pension funds in the U.S., restructured and
extended our long-term debt and will pay every creditor in full,”
said Adam Metz, chief executive officer of GGP. “We are grateful to
all of our stakeholders for contributing to the success of this
process. We are now prepared to begin a new era for GGP on firm
financial footing.”
As part of its plan of reorganization, GGP will split itself
into two separate publicly traded corporations upon emergence, and
current shareholders will receive common stock in both companies.
The new GGP will remain the second-largest shopping mall owner and
operator in the country, with more than 185 regional malls in 43
states, and will focus on largely stable, income-producing shopping
malls and other real estate assets. The spin-off company, The
Howard Hughes Corporation, will consist of GGP’s portfolio of
master planned communities and other strategic real estate
development opportunities.
Mr. Metz continued, “Over the last year and a half we have made
a number of operational enhancements and worked hard to prepare GGP
for a promising future and for the successful spin-off of The
Howard Hughes Corporation. I know these have been challenging times
and I would like to sincerely thank our employees, customers,
suppliers, lenders and partners for all of their support.”
In its restructuring, GGP has successfully and consensually
restructured all of approximately $15 billion of the project-level
debt included in the bankruptcy. These plans provide for the
payment of all allowed creditor claims in full and the extension of
the secured mortgage loans so such debt has a range of maturities,
with no restructured loan maturing before January 1, 2014, and
further provide for the repayment of restructured secured mortgage
debt without any prepayment penalties. Certain debt associated with
non-filed joint venture properties matures prior to 2014. In
addition, $1.65 billion of pre-petition Rouse Bonds have elected to
either exchange for new, longer dated Bonds or be reinstated at
existing rates, thereby providing the company an even more
attractive maturity profile while allowing the company to forgo the
more costly standby term debt facility it had arranged.
In addition, shareholders will receive a substantial recovery
and GGP will implement a recapitalization with $6.8 billion of new
capital. GGP’s investment agreements with Brookfield, Fairholme,
Pershing Square, Blackstone and Teacher Retirement System of Texas
provide GGP with the flexibility to reduce their equity
investments. A key feature of these agreements is a clawback
provision that provides GGP the option to replace up to $2.15
billion of the capital being committed by Fairholme, Pershing
Square and Teacher Retirement System of Texas with the proceeds of
equity issuances at more advantageous pricing. The new GGP has
filed a registration statement on Form S-11 with the Securities and
Exchange Commission to attempt to raise public equity shortly after
emergence from Chapter 11.
The offering of equity will be made only by means of a
prospectus. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission but has
not yet become effective. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration
statement becomes effective. The registration statement on Form
S-11 may be accessed through the Securities and Exchange
Commission’s website at www.sec.gov.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
UBS Investment Bank and Miller Buckfire & Co., LLC are
serving as financial advisors to General Growth Properties in
connection with the restructuring, and Weil, Gotshal & Manges
LLP and Kirkland & Ellis LLP are acting as legal counsel to the
Company.
ABOUT GGP
GGP has ownership and management interest in more than 185
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.
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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