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| GGP to enhance Investment Agreements Mall owner General Growth Properties, Inc. of Chicago 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 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. 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. write your comments about the article :: © 2010 Construction News :: home page |