Providence Place owner files reorg plan

NEW YORK – Providence Place mall owner General Growth Properties Inc. has reached an agreement to reorganize with $6.55 billion from Brookfield Asset Management Inc., Pershing Square Capital Management LP and Fairholme Capital Management LLC, Bloomberg News reported Thursday. The move will give the three investors a combined 65 percent stake in the General Growth, the second-largest U.S. mall owner.
The company filed a request in Manhattan bankruptcy court Wednesday seeking approval of the proposal as part of a procedure to auction itself to the highest bidder. The company also said it plans to file a plan of reorganization in early July, and will give its stakeholders the chance to evaluate higher and better offers while avoiding risks from changes in the financial markets, Bloomberg reported.
If approved by the bankruptcy court, Brookfield Asset, Pershing Square Capital and Fairholme Capital would commit a combined $6.55 billion of new equity and GGP would spin off its “noncore assets” into a new company called General Growth Opportunities, or GGO.
The 550-page reorganization plan does not list Providence Place as transferring to the new company.
The three investment houses would receive warrants worth 120 million shares exercisable at $15 per share. General Growth said the new equity, as well as $1.5 billion debt issuance, would allow the company to emerge from bankruptcy.
“The transaction we filed today will create two unique real estate companies. … General Growth Properties will concentrate on traditional shopping mall assets, including some of the most profitable and strongest properties in the country, and will benefit from General Growth Properties’ recognized leadership in property management, high-quality operations and innovation,” General Growth President and Chief Operating Officer Thomas Nolan said in a statement. “GGO will consist of a diverse portfolio of real estate assets with attractive long-term value-creation prospects.”
In filing the plan, General Grown Properties rejected an offer by rival Simon Property Group, which offered $10 billion for the bankrupt company earlier this year. The merger, if it had occurred, would have created a colossal owner of shopping plazas and malls, operating more than 585 shopping centers across the country.
General Growth’s proposal filed Wednesday would give creditors from Aug. 6 to Sept. 17 to vote on a plan of reorganization, and seek final court confirmation to exit Chapter 11 on Sept. 30, Bloomberg reported.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).