By BILL O'BRIEN
TRAVERSE CITY -- Another financing proposal is on the table for General Growth Properties, another potential option for the owner of the Grand Traverse Mall to emerge from bankruptcy.
General Growth's two largest debt and equity holders this week offered to invest $3.925 billion into the Chicago-based real estate investment trust, on top of a February proposal that would give it more than $6.5 billion of committed equity to climb out of bankruptcy and pay off creditors.
The latest offer, unveiled by General Growth late Monday, includes investments from Fairholme Capital Management LLC, of New Jersey, and Pershing Square Capital Management, of New York. Pershing is among General Growth's largest equity holders, while Fairholme is one of its largest unsecured creditors. Those funds would be added to $2.63 billion in equity offered last month by Brookfield Asset Management, a Canadian property investment firm.
"The proposal from Fairholme and Pershing Square builds on the significant momentum we have created to return GGP to a strong financial foundation for the future," General Growth CEO Adam Metz said in a statement. The company said the offer is subject to approval from its board and U.S. Bankruptcy Court, and that it would continue to look at other offers.
The billions lined up by General Growth is an effort to stave off a $10 billion unsolicited bid for General Growth from Simon Property Group Inc., of Indianapolis, already the country's largest mall owner.
The Fairholme/Pershing Square proposal would advance General Growth's plan to split its assets into separate operations, said Jim Graham, GGP's senior director of public affairs.
The 600,000-square foot Grand Traverse Mall in Garfield Township would end up in General Growth Opportunities, a smaller company that would include around 20 malls around the U.S., and some residential and mixed-use properties. The larger company would remain General Growth Properties and include around 180 of its 200-plus malls, including its highest-end properties in sites like Las Vegas and Hawaii.
The new company known as GGO plans to raise $250 million selling stock at $5 per share. Brookfield would cover $125 million of that sale, while Fairholme and Pershing Square would backstop the rest. As part of the proposal, GGP board member Bill Ackman stepped down because of his relationship with Pershing Square, where he is the founder and a trustee.
Graham said there's no timetable for the proposal to be considered in court or by the GGP board, but the company wants to move quickly. General Growth filed for bankruptcy 11 months ago.
"We are hopeful to have a restructuring plan and emergence from bankruptcy completed during the current year," Graham said.
The offers for General Growth continue to drive up the company's stock price. The stock closed at $14.40 on Wednesday, after dropping to 32 cents per share last spring.
