Published 17 February 2010
Simon Property Group Inc released details overnight of a $US10 billion-plus bid for the bankrupt General Growth Properties Inc, including about $US9 billion in cash, as the crippled target went to court seeking support for a refinancing plan that would see it exit bankruptcy.
Simon’s offer would provide a 100% cash recovery of par value plus accrued interest & dividends to all General Growth trade, loan & investment creditors, which Simon chairman & chief executive David Simon said was worth $US7 billion.
General Growth shareholders would receive more than $US9/share, consisting of $6/share in cash and a distribution of General Growth’s ownership interest in the masterplanned community assets, which General Growth valued at more than $US3/share. Alternatively, General Growth shareholders & creditors could take Simon shares in full or part payment. Secured portfolio debt would remain in place.
The official committee of General Growth’s unsecured creditors has advised Simon that it supports the Simon offer, which wouldn’t be subject to a financing condition. It would be financed through Simon’s cash on hand and through equity co-investments in the acquisition by strategic institutional investors, with the balance coming from Simon’s existing credit facilities.
General Growth, the second-biggest US-owned mall owner, filed for chapter 11 bankruptcy protection in April 2009 for itself and for 166 subsidiaries – most of the individual mall-owning companies in the group, including The Rouse Co and the Howard Hughes Corp.
The group’s 2008 year-end balance sheet showed it had total assets of $US29.6 billion and total debts of $US27.3 billion. Its share price had fallen from $US40 in early 2008 to $US1.05 when it sought bankruptcy protection.
At that time it owned or managed more than 200 regional malls in 44 states containing 20 million m² of retail space in 24,000 shops, and had interests in masterplanned community developments & office buildings.
Simon owns or has an interest in 382 properties comprising 24 million m² of gross lettable area in North America, Europe & Asia.
Simon made a written offer to General Growth’s board on 8 February and released the details overnight. Also yesterday, the bankruptcy court was due to hear General Growth’s request for approval to engage UBS Investment Bank to help evaluate potential financial transactions to take it out of bankruptcy protection. General Growth had previously restructured $US11.6 billion of secured mortgages over 112 of its properties.
17 April 2009: US mall giant General Growth enters bankruptcy protection
21 August 2004: General Growth takes out The Rouse Co
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Attribution: Simon release, General Growth website, story written by Bob Dey for the Bob Dey Property Report.