CHICAGO-General Growth Properties Inc. has fully emerged from its billion-dollar bankruptcy, and has split itself into two separate and independent publicly-traded corporations. The new GGP will own and manage more than 183 malls in 43 states, and the renewed Howard Hughes Corp. will consist of master-planned communities and other development opportunities.
The company restructured about $15 billion of project-level debt, recapitalized with $6.8 billion in new equity capital. The trust has paid all creditor claims in full, and achieved substantial recovery for equity holders, according to Adam Metz, CEO.
As part of the bankruptcy ending, the company has offered 135 million shares of common stock, allowing the company to replace $2.15 billion of its $6.8 billion in equity commitments. Also, the firm said it expects to pay a regular quarterly cash dividend of about 10 cents per share, beginning in Q1 2010. Finally, the company’s Board of Directors agreed to sell the Gateway Overlook Shopping Center in Columbia, MD for $90 million, as part of a continuing initiative to sell non-core assets and reduce debt.
"Today marks the successful end of one chapter in GGP’s history and the beginning of another,” said Metz in a statement. “Over the past 19 months, we have taken extraordinary steps to remake GGP’s entire financial structure while at the same time refocusing our operations across all of our shopping mall properties. We continue the important work of executing on the many operational and financial improvements we initiated during the reorganization process.”
GGP will emerge from its financial restructuring with a strong balance sheet and substantially less debt, 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.
The main company is trading under the name GGP, and was at $14.55 at 2:30 p.m. trading. The new Howard Hughes firm will trade under the ticker symbol HHC. The trust has paid Hughes’ heirs a $220 million settlement in cash.
The company also intends to repay a $350 million Pershing Square note in cash, and to cancel its option to give 35 million shares to Pershing Square at $10 per share. The Hughes family and Pershing payments will enable the company to avoid the issuance of upward of 50 million common shares, reducing potential dilution by about 6%. Bruce Flatt, GGP chairman, said it is fortunate the company’s cash position exceeds what was expected several months ago.
UBS Investment Bank and Miller Buckfire & Co. LLC are serving as financial advisors to General Growth Properties in connection with the restructuring. Weil, Gotshal & Manges LLP and Kirkland & Ellis LLP are acting as legal counsel to the company.
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