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i don't think viewing this as outbidding simon is the way to approach this twist. simon wants the whole company and its bid would remove ggp as a standalone entity.
bam, on the other hand, appears only to be considering how to take out the unsecureds and leave the common intact as well as leaving ggp as a standalone company.
under simon's proposal, all future upside of ggp's portfolio would be simon's. in the bam scenario, at least as reported, if/when ggp emerges from bk and the unsecureds are out of the picture, as ggp's stock recovers the benefit will inure to the stockholders.
now that doesn't mean that simon won't put in another bid to try to get the whole company, but the way in which current shareholders will be compensated will be vastly different when comparing the simon and the reported bam proposals.
when all is said and done, think about sam zell's sale of his equity office portfolio. sam said that blackstone offered him more money that he felt that his holdings were worth. if an offer is made which is too good to pass up, then common sense would dictate that offer should be accepted. if an offer too good to be true looks like it might not be accepted by ggp's board, then individual shareholders will have to make their own decision as to whether or not to sell in the market as opposed to waiting to see how things turn out.
there will be plenty of intrigue to keep our attention for the next week or so. for my part, even though reports speculate that bam's offer will hit the news this week, i would thinks it would be in bam's, as well as ggp's interest, to wait until maybe march 2 (the day before the extension hearing) to announce so as not to give simon any time to mount a response.
simon, however, is getting the reports of bam's apparent impending bid so maybe he will just preempt bam by going out with a counter to his last offer which was rejected. also, since the rating agencies have indicated they may downgrade simon's debt if simon takes out ggp, that may impact what he does.
guess all we can do is stay tuned.
maybe things coming together:
berkowitz (a major unsecured creditor) says he wants to see ggp emerge as a standalone entity. bam seems to be going the same way and with its $2 billion shelf offering approved, it could be another huge puzzle piece in place. add to that ggp's stated intention to raise $1 to $2 billion and that pretty much means that simon has to take his ball and go home. so much for simon saying all unsecureds support his plan.
http://news.morningstar.com/articlenet/article.aspx?id=327031
simon ggp love letters:
Feb 18, 2010
The Simon-GGP love letters
By: Robbie Whelan
Simon Property Group LP’s courtship of bankrupt retail giant General Growth Properties, which owns 10 of Baltimore’s biggest malls, is playing out, a la Abelard and Heloise, in a series of deftly written letters. With each exchange, the proposed, $10 billion takeover, which would create a mega-company that would own somewhere between 25 and 40 percent of all malls in America, becomes more and more tawdry.
It all started with an unsolicited purchase offer from Simon, made public in a letter to GGP’s board this week, after a week of negotiations drew no “substantive response,” according to SPG CEO David Simon. The Wall Street Journal called this type of merger offer — technically a hostile bid — a “bear hug”, or an offer made public with the specific intention of pressuring the acquisition target to accept a deal even though the terms are unfavorable to the company.
The way it works is, Simon shows its plumage by saying, “Our offer is the best offer out there, and your creditors will come out unscathed, but only under our deal.” Simon then hopes that by making the letter public, GGP’s creditors will be impressed, or at least anxious enough to urge GGP to accept the deal. To us, it sort of sounds like classic dating politics. A girl is not responding to your romantic overtures, so you tell all her friends that you’re interested. Maybe you even buy them drinks, so that word might get around that hey, this guy’s not so bad after all!
But Alexander D. Goldfarb, an analyst with Sandler O’Neill, told us that GGP is no pushover, and that the company will likely play hard-to-get. “I would still accept them to play a pretty good game,” he said in a Tuesday Daily Record article.
He was right. Late Tuesday, GGP fired back with a letter of its own: We don’t like your style. We think we could do better. We’re just not that into you. Take some time, GGP said, get to know us, our interests, things to make us smile, what numbers to dial… The letter read:
We believe the information we would provide to you as part of this process will enable you to better understand the Company, get to a higher valuation, and provide a fully documented offer.
Simon’s response? Oh, snap. They did not just go there, telling us that they’re a more expensive date than we thought! So SPG rattled off another passive-aggressive love note late Wednesday. In that letter, which you can read in full here thanks to the good work of Jay Rickey over at CityBizList, Simon shifts to the aggressive courtship tactic that so many men fall back on, sometimes for good, sometimes for bad: telling the object of your desire that she’s not going to do any better than you, that you’re the best option she’ll see, and that she should really think twice about turning you down. Simon wrote to GGP’s CEO, Adam Metz:
…[Our offer] is far superior to any third-party proposal or stand-alone plan that would result from your “process.” … Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your company’s past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders. Time is passing and General Growth is inappropriately speculating with creditors’ money - the company’s high leverage means not only that equity value could be destroyed by relatively small market movements, but that the value of the unsecured debt is also at risk.
Now if I were a late-night radio love doctor and not a business reporter, I would say that Simon really crossed the line here with that last remark. You can tell a girl she’s making a mistake by turning you down, but brother, where do you get off telling her how to live the rest of her life? The snipe about GGP “inappropriately speculating” with other people’s money is biting, and given, it’s meant for the eyes and ears of GGP creditors and investors, not GGP’s board itself, but the tone here has clearly taken a more hostile turn.
Waiting with baited breath to see if and when these two lovebirds will get together!
UPDATE:
It’s heating up again! At 3 p.m., General Growth CEO Adam Metz sent a curt, 4-sentence “Dear John” letter (or, technically, a “Dear David” letter) to Simon Property Group CEO David Simon. It reads as follows:
Dear David,
Reference is made to your letter dated February 17. As we have previously stated, our objective is to maximize value for the company and its stakeholders and we are engaging in a process that is intended to accomplish that result in an expeditious manner. Understandably, your objectives are not aligned with ours. We hope you will, nonetheless, participate in our process.
Sincerely,
Adam Metz
Chief Executive Officer
General Growth Properties, Inc.
What do you think, all you Don Juans and Femme Fatales out there in Heartbreak Land? Should Simon take this brush-off lying down, or is Metz just being a tease?
(Photo of General Growth’s Harborplace, clearly
yes, still holding. have been in this since the first week of march, 2009. about two more weeks and i will have been holding long enough to qualify for capital gains as opposed to ordinary income.
help is on the way!
Amendment No. 1 dated February 18, 2010 to the Short Form Base Shelf Prospectus dated January 12, 2009
This Amendment, together with the Base Short Form Shelf Prospectus dated January 12, 2009, constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.
US$2,000,000,000
BROOKFIELD ASSET MANAGEMENT INC.
Debt Securities
Class A Preference Shares
The short form base shelf prospectus (the “Prospectus”) of Brookfield Asset Management Inc. dated January 12, 2009 is amended by providing that the maximum aggregate offering amount of securities that may be offered and issued from time to time under the Prospectus is increased from US$1,000,000,000 to US$2,000,000,000 and, in particular, deleting the references to US$1,000,000,000 contained on the face page of the Prospectus and substituting therefor “US$2,000,000,000”. The first paragraph of the text on the face page of the Prospectus, as so amended, reads as follows:
“Brookfield Asset Management Inc. (the “Company”) may from time to time offer and issue (i) unsecured debt securities (“Debt Securities”) and (ii) Class A Preference Shares (“Preference Shares”) under this short form base shelf prospectus (“Prospectus”). The Debt Securities and the Preference Shares (collectively, the “Securities”) offered hereby may be offered separately or together, in one or more series in an aggregate principal amount of up to US$2,000,000,000 (or the equivalent in other currencies or currency units) or, if any Debt Securities are offered at an original issue discount, such greater amount as shall result in an aggregate offering price of US$2,000,000,000. Securities of any series may be offered in such amount and with such terms as may be determined in light of market conditions. The specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying prospectus supplement (“Prospectus Supplement”) and may include, where applicable (i) in the case of Debt Securities, the specific designation, aggregate principal amount, denomination (which may be in United States dollars, in any other currency or in units based on or relating to foreign currencies), maturity, interest rate (which may be fixed or variable) and time of payment of interest, if any, any terms for redemption at the option of the Company or the holders, any terms for sinking fund payments, any listing on a securities exchange, the initial public offering price (or the manner of determination thereof if offered on a non-fixed price basis) and any other specific terms and (ii) in the case of the Preference Shares, the designation of the particular class, series, aggregate principal amount, the number of shares offered, the issue price, the dividend rate, the dividend payment dates, any terms for redemption at the option of the Company or the holder, any exchange or conversion terms and any other specific terms. Each such Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of each such Prospectus Supplement and only for the purposes of the distribution of the Securities to which such Prospectus Supplement pertains.”
your objectives are not aligned with ours!!!
General Growth Properties Inc. /quotes/comstock/11i!ggwpq (GGWPQ 12.71, -0.21, -1.63%) on Thursday spurned Simon Property's /quotes/comstock/13*!spg/quotes/nls/spg (SPG 77.36, +1.51, +1.99%) overtures, suggesting that it may be holding out for a better deal. "As we have previously stated, our objective is to maximize value for the company and its stakeholders and we are engaging in a process that is intended to accomplish that result in an expeditious manner. Understandably, your objectives are not aligned with ours. We hope you will, nonetheless, participate in our process," said General Growth. The comment is in response to Simon's letter from Wednesday warning General Growth that its offer, valued at more than $10 billion, is not open-ended.
ggp eyeing public offering?
General Growth eyeing public market for exit -source
Thu Feb 18, 2010 2:10pm EST
NEW YORK, Feb 18 (Reuters) - Mall operator General Growth Properties (GGWPQ.PK) is looking to raise $1 billion to $2 billion from public markets to fund its exit from bankruptcy, a source familiar with the situation said on Thursday.
General Growth offered Simon Property Group (SPG.N), which has made a $10 billion offer to buy General Growth, a non disclosure agreement in December, but Simon did accept it, said the source, who requested anonymity because the talks are not public.
Simon went public with its offer for General Growth on Tuesday. The trigger behind Simon's move was the worry that General Growth would succeed in raising the funds it needs to exit from bankruptcy in a few weeks, the source said.
Simon and General Growth did not have have an immediate comment. (Reporting by Paritosh Bansal, additional reporting by Ilaina Jonas; Editing by Derek Caney) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)
sullivan says about simon says:
Simon to GGP: “We Might Rescind The Offer You Rejected” …So What?? $$
ToddSullivan February 17th, 2010 Just got back from a day on the inter-coastal waterway…first time, really neat. Now, let’s look at this and call it what it is…..
Why is Simon making this offer now? Monday….
What?
Monday is the date for the hearing to extend management’s request for exclusivity in proposing a plan of reorganization before the bankruptcy court.
What Simon is doing is proposing their own plan to the judge outside of the court process. They are essentially saying “here is a deal that will allow unsecured creditors to be paid in full, give some money to equity holders and will allow the company to emerge from Chapter 11?.
Simon knew GGP would reject their offer as being the joke it was and their feigned indignation it was is insulting to those with even a basic level of intelligence. When you have the company’s largest shareholder, Bill Ackman publicly stating he believe the common is worth $30-$40 a share, can Simon actually expect us to believe they thought he would vote to accept $9. Really? Really?
Does David Simon really think after all the public discourse over GGP (blogs anyway, the MSM missed this whole thing big time), that those who hold shares do not think they are worth AT LEAST twice what he offered? Is his world truly that insular?
Given approx. 50% of the common shares are owned by the Board and management, did he really think that any deal in which equity holders are given anything less that what they believe they are deserved would be given anything other than a passing glance?
Here is the thing though. On Monday the judge will extend GGP’s request for exclusivity because even though Simon’s plan is “fully financed”, there is still considerable doubt as the whether the deal would pass FTC scrutiny. Because of that, it is by no means a “done deal” even were GGP to accept. Since that is the case, the Judge will be inclined to let both processes play out and allow GGP’s request. Remember, in Chapter 11 management is legally obligated to maximize value for “all stakeholders” and that includes equity holders as well as full payment to debt holders (which is not at issue). All they need do is convince the judge they have a better plan to do just that. Ought to be easy…
What Simon is hoping for is that GGP will be forced at the hearing to disclose some details of what they and “other parties” have discussed or give more insight into their plans. It is a rather transparent attempt to gain an advantage at the bargaining table, one which I am sure the Judge sees for what it is.
When it is extended, Simon will be forced to make a real offer for GGP. It will have to be $13B or higher which values the equity at roughly $6B or near $20 a share. That is a number that would put pressure on management from all stakeholders to take it serious.
This offer at this time smacks of desperation on Simon’s part. It is as if David Simon knows he cannot match the financial firepower of the Brookfield boys, the possible FTC issues and is trying an end around to the eventual bidding war for GGP.
Here is Simon’s letter to GGP regarding GGP’s rejection of the offer
Mr. Adam Metz
Chief Executive Officer
General Growth Properties, Inc.
110 North Wacker Drive
Chicago, Illinois 60606
Dear Adam,
We appreciate that you have responded to the written offer we made to you on February 8, 2010, but we are concerned by your letter of February 16, 2010.
It is simply wrong to characterize our offer as an “indication of interest.” As you well know, we have made a firm, fully financed $10 billion offer that provides immediate 100% cash recovery of par value plus accrued interest and dividends to all unsecured creditors, plus more than $9.00 per share in value to shareholders. Our offer has no financing contingency and can be completed quickly. The credibility of Simon Property Group as an acquiror speaks for itself, no one has completed more mergers and acquisitions in the retail real estate industry.
Importantly, this is the only offer for General Growth which provides a full cash recovery for unsecured creditors while reducing risk and providing potential upside. It is far superior to any third-party proposal or stand-alone plan that would result from your “process.” Proceeding expeditiously to complete our transaction would prevent an extended period of market risk for your stakeholders. In addition, our offer would remove the serious downside risks associated with a recapitalization, the value of which would be inherently uncertain and subject to future market conditions, even if a recapitalization could be secured.
Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your company’s past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders. Time is passing and General Growth is inappropriately speculating with creditors’ money – the company’s high leverage means not only that equity value could be destroyed by relatively small market movements, but that the value of the unsecured debt is also at risk. Accordingly, it is not surprising that the Official Committee of General Growth’s Unsecured Creditors has publicly stated that it supports our offer and encourages you to engage with us promptly to allow our offer to be considered by your creditors and shareholders.
We have tried for many months to explore a transaction with you that would give creditors and shareholders an attractive and expeditious exit from your bankruptcy process and have been repeatedly put off. Time and again, serious engagement with us has been pushed off into some indefinite future when you might start to begin to commence a “process.”
While you pay lip service to time being of the essence, the “process” outlined in your letter will take many months before a transaction could be agreed and made available to stakeholders. Our offer is fully financed and we are prepared to complete confirmatory due diligence within 30 days, during which time we are also prepared to negotiate and enter into a definitive agreement that will bring certainty to the closing of a transaction. We will promptly provide you a draft of such a definitive agreement and are prepared to meet with your advisors to complete its negotiation.
With respect to your equity holders, we do not believe there is any other party which can offer the value creation of a Simon-General Growth transaction. As you know, we are prepared to discuss offering Simon common equity instead of cash to those General Growth shareholders or unsecured creditors who would prefer to participate in the upside of owning Simon stock. While Simon equity is subject to market conditions, Simon is today — and would be following any transaction — a fortress of stability.
We are unwilling to waste our time and resources in a process not conducted on a level playing field, that is dragged out to provide an unfair advantage to any party, or that will serve any agenda other than maximizing return for General Growth’s stakeholders — while also minimizing the risk and uncertainty of needlessly extending the bankruptcy proceedings. Accordingly, we urge you not to pursue another proposal that you might receive, whether before or after the commencement of your process – as you threaten in your letter – without also substantively engaging with us. Regarding access to the data necessary for us to perform our confirmatory diligence, we are willing to agree to customary undertakings to preserve the confidentiality of such information. However, in light of your conduct to date, and for the reasons outlined above, we are not willing to agree to any restriction on our right to make proposals at any time or to otherwise speak freely, including to all of General Growth’s stakeholders, or to agree to any other standstill or similar provision.
I want to reiterate that our offer is not open-ended, and we have a number of other opportunities under consideration. We sincerely hope you will engage seriously with us without further delay.
Very truly yours,
David Simon
Chairman of the Board and
Chief Executive Officer
cc: Official Committee of Unsecured Creditors
Funny…..but, am I the only one who wonders who that letter was actually being written to? It certainly was not being written to Mr. Metz. If it was, why even write it? Metz rejected the first offer out of hand and I am guessing is well aware of Simon’s history. Why regurgitate it to Metz and reiterate the offer?
Does David Simon think Metz , Ackman et. all did not understand it the first time?
Does David Simon think that if he insults GGP’s management team they will be more inclined to accept the offer?
Does David Simon know GGP is not in advanced talk with another entity?
Does David Simon really think that the above mentioned management, with their huge personal stake in GGP would not take a $9 a share offer serious and not summarily reject it unless they have other tangible, better alternatives in the works?
Does David Simon really expect shareholders to agree to his offer, take a 30%+ loss on their stock holdings (based on today’s closing price) and cease all other negotiations for 30 days while Simon “completes due diligence” and then “enter into a definitive agreement” (meaning the final price may be lower than this one)?
I don’t get David Simon. I understand he has been a great acquirer of other properties in the past. I also know that this is the first time a potential deal has taken place in the spotlight like this.
It was just last fall he said he was looking “at GGP in its entirety“. Later it was disclosed during that time frame they had been buying unsecured debt. As late as last week, they said they were “not in active negotiations” with GGP but according to Adam Metz’s letter to Simon yesterday, they were talking. I guess it depends on what your definition of “active” is.
Now this, tantrum, for lack of a better word from Mr. Simon. I will say this, if David Simon ever holds a poker game, please get me a seat at the table. This was a offer we all knew was coming, even after it was essentially denied last week and it was a flop. David Simon bluffed to beat a straight with a pair of 5’s.
My money is still on the Brookfield Asset (BAM)/Brookfield Properties (BPO) team.
i see you have fallen on a bit of a rough time,
therefore, just to show you what a swell guy i am, i going to offer you, on a one time basis (you know we can't do this all day), $25 for every $100 bill you give us. whatever you do, don't look for another deal or try to exchange your $100 dollar bills for 5 twentys because the deal i just offered you is the best there is. hurry up, make a decision, i don't have all day to waste on this deal.
meow. david simon's response to ggp
Chief Executive Officer
General Growth Properties, Inc.
110 North Wacker Drive
Chicago, Illinois  60606
Dear Adam,
We appreciate that you have responded to the written offer we made to you on February 8, 2010, but we are concerned by your letter of February 16, 2010. Â
It is simply wrong to characterize our offer as an â??indication of interest.â? Â As you well know, we have made a firm, fully financed $10 billion offer that provides immediate 100% cash recovery of par value plus accrued interest and dividends to all unsecured creditors, plus more than $9.00 per share in value to shareholders. Â Our offer has no financing contingency and can be completed quickly. The credibility of Simon Property Group as an acquiror speaks for itself, no one has completed more mergers and acquisitions in the retail real estate industry. Â
Importantly, this is the only offer for General Growth which provides a full cash recovery for unsecured creditors while reducing risk and providing potential upside. Â It is far superior to any third-party proposal or stand-alone plan that would result from your â??process.â? Â Proceeding expeditiously to complete our transaction would prevent an extended period of market risk for your stakeholders. Â In addition, our offer would remove the serious downside risks associated with a recapitalization, the value of which would be inherently uncertain and subject to future market conditions, even if a recapitalization could be secured.
Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your companyâ??s past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders. Â Time is passing and General Growth is inappropriately speculating with creditorsâ)C2?? monay â?? the companuâ??)99s high leverage means not only that equity value could be destroyed by relatively small market movements, but that the value of the unsecured debt is also at risk. Â Accordingly, ix is not surpriseng that the Offmcial Committee gf General Growtdâ??)99s Unsecured Cveditors has publicly stated that it supports our offer and encourages you to engage with us promptly to allow our offer to be considered by your creditors and shareholders.
We have tried for many months to explore a transaction with you that would give creditors and shareholders an attractive and expeditious exit from your bankruptcy process and have been repeatedly put off. Â Time and again, serious engagement with us has been pushed off into some indefinite future when you might start to begin to commence a â??process.â?
While you pay lip service to time being of the essence, the â??processâ? outlined in your letter will take many months before a transaction could be agreed and made available to stakeholders. Â Our offer is fully financed and we are prepared to complete confirmatory due diligence within 30 days, during which time we are also prepared to negotiate and enter into a definitive agreement that will bring certainty to the closing of a transaction. Â We will promptly provide you a draft of such a definitive agreement and are prepared to meet with your advisors to complete its negotiation.
With respect to your equity holders, we do not believe there is any other party which can offer the value creation of a Simon-General Growth transaction. Â As you know, we are prepared to discuss offering Simon common equity instead of cash to those General Growth shareholders or unsecured creditors who would prefer to participate in the upside of owning Simon stock. Â While Simon equity is subject to market conditions, Simon is today -- and would be following any transaction -- a fortress of stability. Â Â
We are unwilling to waste our time and resources in a process not conducted on a level playing field, that is dragged out to provide an unfair advantage to any party, or that will serve any agenda other than maximizing return for General Growthâ??s stakeholders -- while also minimizing the risk and uncertainty of needlessly extending the bankruptcy proceedings. Â Accordingly, we urge you not to pursue another proposal that you might receive, whether before or after the commencement of your process â?? as you threaten in your letter â?? without also substantively engaging with us. Â Regarding access to the data necessary for us to perform our confirmatory diligence, we are willing to agree to customary undertakings to preserve the confidentiality of such information. Â However, in light of your conduct to date, and for the reasons outlined above, we are not willing to agree to any restriction on our right to make proposals at any time or to otherwise speak freely, including to all of General Growthâ??s stakeholders, or to agree to any other standstill or similar provision.
I want to reiterate that our offer is not open-ended, and we have a number of other opportunities under consideration. Â We sincerely hope you will engage seriously with us without further delay.
Very truly yours,
David Simon
Chairman of the Board and
Chief Executive Officer
cc: Official Committee of Unsecured Creditors
another take on simon bid:
http://retailtrafficmag.com/news/simon_offers_10billion_for_ggp_02162010/
ggp's response to simon bid:
http://finance.yahoo.com/news/General-Growth-Properties-bw-4091196203.html/print?x=0
bidding starts! simon offers $10 billion for ggp
extension request filed.
pay attention to paragraphs 5 and 6
http://www.kccllc.net/documents/0911977/0911977100129000000000009.pdf
ubs engaged to assist in exit financing
Press Release Source: General Growth Properties, Inc. On Monday January 25, 2010, 10:44 pm
CHICAGO--(BUSINESS WIRE)--General Growth Properties, Inc. (“GGP” or the “Company”) today announced it has engaged UBS Investment Bank, a leading global full service financial firm, to assist the Company in evaluating potential financial transactions for emergence from Chapter 11, raising exit capital and with such other matters as may be required by the Board of Directors. The engagement of UBS is subject to Bankruptcy Court approval.
GGP and certain of its subsidiaries filed bankruptcy in April 2009 as a result of the inability to refinance maturing mortgage loans due to the collapse of the credit markets. Since the filing, the Company has pursued subsidiary plans of reorganization to extend mortgage maturities, and, as previously reported, has confirmed plans to restructure secured mortgage loans on 112 properties aggregating approximately $11.6 billion. The Company is focused on the emergence from bankruptcy for the remaining debtors and in connection with such emergence, the reduction of corporate debt and overall leverage and establishment of a sustainable, long-term capital structure for the Company. The Company has determined that new financing will be desirable to achieve these objectives and emerge from Chapter 11.
At the outset of the bankruptcy process, the Company engaged Miller Buckfire & Co., LLC as financial advisor and investment banker. Given the unique circumstances of the Company’s bankruptcy filings and the fundamental soundness of the Company’s core retail business, the Board of Directors and management of the Company have determined that the Company should consider all forms of exit financing, including capital sources not generally associated with financing a company’s emergence from bankruptcy. UBS has been retained to assist with this process.
“The engagement of UBS complements the services provided to us by Miller Buckfire,” said Adam Metz, chief executive officer of GGP. “With both advisors, we are positioned to analyze and source the most cost effective primary capital that we will need to complete the reorganization process, a goal intended to benefit all of our stakeholders.”
A hearing to consider the Company’s motion to engage UBS is currently scheduled before the Bankruptcy Court on February 16, 2010.
ggp thrown out with bathwater
ggp was mentioned in the article regarding tishman speyer's default and decision to let the banks take over tishman's stuyvesant property at almost a $2 billion loss. guessing this is why ggp is down today. no attempt was made to detail ggp's progress in emerging from bk so it's just getting pasted today. no impact on ultimate value. things moving along nicely for ggp.
cut and paste synopsis of the article follows:
A group led by Tishman Speyer Properties has decided to give up the sprawling Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors in the collapse of one of the most high-profile deals of the real-estate boom.
The decision comes after the venture between Tishman and BlackRock Inc. defaulted on the $4.4 billion debt used to help finance the deal. The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006—the most ever paid for a single residential property in the U.S. The venture had been struggling for months to restructure the debt but capitulated facing a massive debt load and a weak New York City economy that has undercut rents and demand for high-priced apartments.
By some accounts, Stuyvesant Town is only valued at $1.8 billion now, less than half the purchase price. By that measure, all the equity investors—including the California Public Employees' Retirement System, a Florida pension fund and the Church of England—and many of the debtholders, including Government of Singapore Investment Corp., or GIC, and Hartford Financial Services Group, are in danger of seeing most, if not all, of their investments wiped out.
The troubles experienced by landlords nationwide are stoking fears among regulators and bankers that turmoil in commercial real-estate may derail the hoped-for economic recovery.
Write to Lingling Wei at lingling.wei@dowjones.com and Mike Spector at mike.spector@wsj.com
ggp announces property loan extensions:
General Growth Properties Announces Extension on Carolina Place Loan and Provides Update on Loan Closings and Subsidiary Emergences
Press Release Source: General Growth Properties, Inc. On Monday January 25, 2010, 6:30 am EST
CHICAGO--(BUSINESS WIRE)--General Growth Properties, Inc. (“GGP” or the “Company”) today announced its joint venture subsidiary, Carolina Place L.L.C., has closed on an extension of its $155 million mortgage loan originally scheduled to mature this month. The four year extension is at the current contract rate of interest, 4.5975%. The all-in-interest rate after amortization of fees to be paid in connection with this loan is 5.11%. Carolina Place is a 1.3 million square foot regional shopping center located in Pineville, North Carolina. This joint venture subsidiary was not one of the GGP entities that sought bankruptcy court protection.
GGP also announced completion of the restructuring of 74 secured mortgage loans aggregating approximately $9.4 billion. As a result, 180 GGP subsidiary debtors owning 96 properties are no longer in bankruptcy. This final step follows the December 2009 Bankruptcy Court approval (also called confirmation) of the plans of reorganization that permitted the restructuring of these loans and the emergence from bankruptcy for the associated subsidiaries and properties.
Restructuring of the remaining 16 loans aggregating approximately $2.1 billion approved by the Bankruptcy Court in December 2009 and January 2010 is expected to be completed in the ordinary course during the next few weeks. When these restructured loans are complete, all of the plans of reorganization previously approved by the Bankruptcy Court will also be fully implemented. As a result, when complete, 36 additional subsidiary debtors associated with 16 properties will no longer be in bankruptcy.
A complete list of subsidiary debtors and properties is found at:
http://www.ggp.com/company/Default.aspx?id=111
http://www.ggp.com/company/Default.aspx?id=112
ABOUT GGP
GGP currently has ownership interest in, or management responsibility for, more than 200 regional shopping malls in 43 states, as well as ownership in planned community developments and commercial office buildings. The company’s portfolio totals approximately 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. The Company’s common stock is currently traded in the over-the-counter securities market operated by Pink OTC Markets Inc. using the symbol GGWPQ.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements for a number of reasons, including, but not limited to, effectiveness of the plans of reorganization, the bankruptcy filings of the other debtors not currently emerging from bankruptcy, our ability to refinance, extend or repay our near and intermediate term debt, our substantial level of indebtedness, changes in interest rates, retail and credit market conditions, impairments, land sales in the master planned communities segment, the cost and success of development and re-development projects and our liquidity demands. Readers are referred to the documents filed by General Growth Properties, Inc. with the Securities and Exchange Commission, which further identify the important risk factors that could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements.
ackman on cnbc tomorrow at 7:00am
the teaser only taked about pershing square's purchase of its 2% positio in kraft but maybe someone will ask about status of general growth.
general growth expanding in brazil
http://www.reuters.com/article/idCNN1410484820100114?rpc=44
no!, general growth is not selling stock, it is holders or shorters of the stock who are selling and someone is buying those shares. that is what creates a market. what i'm saying is that it is fairly easy to manipulate this stock with not much volume and that i expect that leading up to the three day period in which the average price of the stock will be determined for purposes of paying the dividend that i expect there will be continued downward pressure.
say you own 12 thousand shares of the stock and that the average price as determined on the three days around the 20th of january is $12/share. based on a $0.19/share dividend you would receive a dividend equal to $2280 (12k shares x .19 = 2280) the amount of the dividend has already been determined. what hasn't been determined is the value of the stock for purposes of paying the dividend.
lets also assume you are going to take your total dividend in stock. if the average stock price is $12/share then you would get an additional 190 shares of stock as a dividend (2280/12 = 190).
now, let's assume the stock price is driven down to an average price of $10/share over those critical days in january. if average stock price is $10/share you would receive 228 shares (2280/10 = 228).
if you recall last year when simon paid its dividend in stock. the simon shares were trading around the mid-thirties. every share of simon stock which was received as a dividend last year at that time is now worth around $75/share. don't know about you, but i would rather take the dividend in shares at a lower price and see some rather quick capital appreciation that take the cash and figure out how to double or triple my cash over a similar period.
this stock will be volatile over the next few weeks for a number of reason: determining the average stock price for purposes of paying dividends; credible announcements regarding the progress of settling the remaining secured debt; credible news regarding the disposition of the unsecured debt; credible news about the emergence of various properties from bk as the por is approved; general good or bad news in the market which may or may not have anything to do with ggwpq; and most importantly ggp's announcement that is has completed it business in bk and emerges as a healthy company. add in a real buyout offer as opposed to some company's expression of interest, and this stock will also move.
order filed, partial por approved
guessing downward pressure on stock is attempt to get price lower so that more stock will have to be paid for the upcoming dividend.
http://www.kccllc.net/documents/0911977/0911977100112000000000001.pdf
by all accounts, ggwpq should do better than pilgrim's pride when it emerges. that said, the pilgrim trade seems to have ended up pretty sweet. what was the last trade for pilgrim's before the announcement that it was emerging? does the 34% which goes to equity holders translate into more, less, or about the same as what you had the day before it announced it was emerging?
still holding on to all of my shares. don't plan to make any moves until the por is announced and we see how the ggwpq shares will be traded in exchange for the post-emergence shares. of course, all of that could change if there is a reasonable buyout offer. think reits are down in general today so ggwpq's down movement is not surprising. next big move (up or down) will probably not come until such time as a resolution of the unsecured debt is announced. still hoping that a por will be filed next month but can not imagine with the progress made that the judge would not grant an exclusive extension to general growth if they were to request it.
want to try that again in english?
am guessing you know what you meant by that post, but i certainly can not imagine what you are attempting to say. give it another shot.
or, maybe hovde covered its short position
looks like somebody was playing big today!
that's a 7+ million closing trade today
Recent Trades - Last 10
Time Ex Price Change Volume
16:05:35 Q 11.55 -0.86 7,341,000
16:05:23 Q 11.55 -0.86 174
16:01:05 Q 11.50 -0.91 10,000
16:00:52 Q 11.55 -0.86 10,000
16:00:21 Q 11.50 -0.91 3,900
16:00:13 Q 11.55 -0.86 4,500
16:00:02 Q 11.55 -0.86 3,800
15:59:55 Q 11.55 -0.86 1,000
15:59:54 Q 11.50 -0.91 1,200
15:59:52 Q 11.51 -0.90 2,000
it's amazing what you do not remember when you come out of the procedure. i wanted to know how i got dressed when the procedure was over and asked my wife if the nurse dressed me. she laughed and said i did it. could'nt walk very well and certainly was foggy in the head. imagine i will grab a bite to eat this evening and hit the sack.
glad to see our stock didn't sell off after yesterday's huge move up. yes, i like the math of 25K x $40/share. what a dream if that were to occur but half of that would be just wonderful. well, gotta go and thanks for asking re my "disappearance".
yes, still holding on to my 25K shares. my connection is dial up and i can not access all of the recent streaming data and videos which came out in the last couple of days but i have been able to read what hard copies i can access. it's a 50 mile round trip to get wifi access so i don't make the trip much and since i noticed the ackman rebuttal posted here there was no need to say much since he did it so well. also, the stock seems to have answered well for itself. additionally, i'm at that age where every five years i get to subject myself to the "procedure" so yesterday was spent drinking fluids and taking pills and today is the procedure day so i won't be around on the boards much today either. merry christmas to all and the way things are going we longs should have a happy new year. ggp has certainly been the cure to my portfolio and it hopefully has been to all of the longs who have held on for what looks to be a spectacular payoff.
$0.19/share dividend to be paid in jan.
CHICAGO--(BUSINESS WIRE)--General Growth Properties, Inc. (“GGP”) today announced that the Bankruptcy Court authorized the payment of a dividend to holders of GGP common stock, and that its Board of Directors had declared a common stock dividend of $0.19 per share, payable in combination of cash and common stock. The dividend is payable on January 28, 2010, to stockholders of record on December 28, 2009. The cash component of the dividend will not exceed 10% in the aggregate.
In accordance with Internal Revenue Service procedure, stockholders may elect to receive payment of the dividend all in cash or all in common stock. To the extent that more than 10% of cash is elected, the cash portion will be prorated. Stockholders who do not make an election will receive 100% in common stock. The number of shares of common stock issued as a result of the dividend will be calculated based on the volume weighted average trading prices of GGP’s common stock on January 20, 21 and 22, 2010. GGP expects the dividend to be taxable to its stockholders, without regard to whether a particular stockholder receives the dividend in the form of cash or common stock.
An information letter and election form will be mailed to stockholders of record promptly after December 28, 2009. The properly completed election form to receive cash or shares of common stock must be received by GGP’s transfer agent prior to 5:00 p.m. (EST) on January 22, 2010. Registered stockholders with questions regarding the dividend election may call BNY Mellon Shareowner Services, GGP’s transfer agent, at (201) 680-6578. If your shares of common stock are held through a bank, broker or nominee, and you have questions regarding the dividend election, please contact such bank, broker or nominee, who will also be responsible for distributing to you the letter and election form and submitting the election form on your behalf.
ABOUT GGP
GGP currently has ownership interest in, or management responsibility for, more than 200 regional shopping malls in 43 states, as well as ownership in planned community developments and commercial office buildings. The company’s portfolio totals approximately 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. The Company’s common stock is currently traded in the over-the-counter securities market operated by Pink OTC Markets Inc. using the symbol GGWPQ.
order authorizing payment of dividend:
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
:
In re : Chapter 11 Case No.
:
GENERAL GROWTH : 09 – 11977 (ALG)
PROPERTIES, INC., et al., :
: (Jointly Administered)
Debtors. :
---------------------------------------------------------------x
ORDER, PURSUANT TO SECTIONS 105(a) AND 363 OF
THE BANKRUPTCY CODE, APPROVING
THE DEBTORS’ DECLARATION AND PAYMENT OF CERTAIN DIVIDENDS
Upon the motion (the “Motion”)1
of South Street Seaport Limited
Partnership, its ultimate parent, General Growth Properties, Inc. (“GGP”), and its debtor
affiliates, as debtors and debtors in possession (collectively, the “Debtors”) for entry of
an order (the “Order”), pursuant to Sections 105(a) and 363 of the Bankruptcy Code, for
an Order Approving the Payment of Dividends; and it appearing that the relief requested
is in the best interests of the Debtors, these estates and all parties in interest; the Court
having jurisdiction to consider the Motion and the relief requested therein pursuant to 28
U.S.C. §§ 157 and 1334; consideration of the Motion and the relief requested therein
being a core proceeding pursuant to 28 U.S.C. § 157(b); venue being proper before this
court pursuant to 28 U.S.C. §§ 1408 and 1409; notice of the Motion having been
adequate and appropriate under the circumstances; and after due deliberation and
sufficient cause appearing therefor, it is hereby ORDERED:
1. The Motion is granted to the extent provided herein;
2. The Debtors’ are permitted to declare and pay such dividends and
distributions for the 2009 taxable year to enable GGP to maintain its qualification as a
REIT and to avoid payment of entity level income taxes and the Excise Tax (the
“Dividend”);
3. Any REIT-related dividend made by GGP shall be declared and
paid in cash and GGP common stock with the cash portion thereof limited, in the
aggregate, to 10% of GGP’s REIT-related dividend obligation;
4. The Debtors’ directors and officers, as applicable, are authorized to
take such steps necessary to implement and effectuate the declaration and payment of the
Dividend;
5. The Debtors are authorized to take all actions necessary to
effectuate the relief granted pursuant to this Order in accordance with the Motion.
6. Notwithstanding the possible applicability of Bankruptcy Rules
6004(h), 7062 and 9014 or otherwise, the terms and conditions of this Order shall be
immediately effective and enforceable upon its entry.
7. The Court retains jurisdiction with respect to all matters arising
from or related to the implementation of this Order.
Date: December 18, 2009
New York, New York
/s/ Allan L. Gropper
THE HONORABLE ALLAN L. GROPPER
UNITED STATES BANKRUPTCY JUDGE
ggp bk shaking/changing legal foundations:
some time ago i posted that ggp's bk would change the way reit loans would be done and that it would be transformative to the industry. looks like it might be even wider spread than r/e.
this is why the secured lender's modifications were so difficult and why some of those secureds are still not complete. it will get done, and soon, but this is what simon and the rest of the reit industry will be facing when their loans come up for renewal.
ok, dividend should be approved today, the remainder of the secureds should fall in line, and we can then move to complete the unsecured and shareholder issues. hopefully the wind is at our back for the remainder of the year and into next.
http://currents.westlawbusiness.com/Articles/2009/12/20091215_0023.aspx?cid=&src=
more color from bloomberg:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aVm_R55pPtkY
tax implications of stock dividend.
In order to maintain its qualification as a REIT, the Company is required (among other provisions) to annually distribute dividends to its stockholders in an amount at least equal to, generally, 90% of the Company's REIT taxable income. Additionally, as a REIT, the Company may be subject to a federal excise tax if it distributes less than 85% of its ordinary income by the end of the calendar year. For purposes of that excise tax, the December Dividend will be treated as paid by the Company on December 31, 2009. Accordingly, the Company's dividends are largely based on REIT taxable income, as determined for federal income tax purposes as opposed to its net income computed in accordance with GAAP (as reported in the Company's consolidated financial statements), and are paid if and when declared by the Company's Board of Directors.
Tax Consequences to REITs and Shareholders on Elective Stock Dividends: Questions and Answers
Q: THE IRS RECENTLY ISSUED GUIDANCE TO REITS ABOUT THE USE OF ELECTIVE STOCK DIVIDENDS. WHAT DOES IT MEAN?
A. In December 2008, the IRS issued Revenue Procedure 2008-68, which permits listed REITs to pay “elective stock dividends” through 2009 if the company elects to do so. Elective stock dividends are dividends comprised of a combination of cash and stock. Under this IRS guidance, so long as a REIT provides its shareholders with a choice between cash or stock (and so long as at least 10 percent of the total dividend is available in cash), the entire dividend distribution is treated as a distribution of cash for purposes of the tax rules to qualify as a REIT.
If a REIT chooses to pay an elective stock dividend, the entire distribution is taxable to a shareholder as a dividend to the extent of the REIT’s current and accumulated earnings and profits, and then treated as a return of the shareholder’s tax basis in the stock (otherwise known as a “return of capital” distribution), with any excess then treated as received in exchange for stock. If the stock has been held for more than one year and is a capital asset, this excess amount typically is eligible for the maximum rate applicable to long-term capital gains, 15 percent. “Earnings and profits” (E&P) is a specific amount calculated for tax purposes that generally (but not completely) conforms to taxable income.
The Revenue Procedure was modeled after a series of private letter rulings that the IRS issued to individual REITs from 2001-2008 that also concluded that these elective stock dividends were eligible for a REIT’s dividends paid deduction and produced the same tax consequences to REIT shareholders as described above. The only significant substantive difference between the Revenue Procedure and the private letter rulings is that under the private rulings a REIT was required to make available to shareholders a cash floor of 20 percent cash.
This IRS guidance provides listed REITs with the ability to use this election to retain and conserve cash in the midst of a financial environment in which credit is severely constrained and at a time when the future availability of credit is highly uncertain.
In January 2009, the IRS issued Revenue Procedure 2009-15 to extend Revenue Procedure 2008-68 to mutual funds. Both revenue procedures only apply to dividends paid for tax years 2008 and 2009.
Q: WHAT IS THE TAX TREATMENT OF AN “ELECTIVE STOCK DIVIDEND” FOR REIT SHAREHOLDERS?
A: In general, for federal income tax purposes, the elective stock dividend is treated as a distribution entirely of cash.
Accordingly, each shareholder must include the sum of the value of the shares and the amount of cash received from the elective stock dividend in his or her gross income as dividend income to the extent that the dividend is made out of the portion of the REIT’s current and accumulated E&P allocable to the elective stock dividend. (For example, if 90% of the total dividend were made out of the REIT’s E&P, then 90 percent of the cash and the value of the stock received by a U.S. shareholder must be included in that shareholder’s gross income as dividend income). The amount of the distribution in excess of the REIT’s current and accumulated E&P then would be treated as a return of a shareholder’s tax basis in the stock. Any additional excess then would be treated as an amount realized for the sale or exchange of the stock for a shareholder that holds the stock as a capital asset.
Revenue Procedure 2008-68 confirms that the amount of the elective stock dividend paid in common stock will be equal to the amount of cash that could have been received instead of the common stock. A shareholder that receives shares of a REIT’s common stock pursuant to the elective dividend would have a tax basis in such stock equal to the amount of cash that could have been received instead of such shares, as described above, and the holding period in such stock would begin on the day following the distribution date for the elective stock dividend. Accordingly, a shareholder that sells the stock he or she receives immediately after receipt from the elective stock dividend would have no further taxable gain because the amount received from such sale would equal the tax basis of such stock.
Q: WHAT IS THE TAX TREATMENT FOR A REIT OF IN CONNECTION WITH ITS DISTRIBUTION OF AN ELECTIVE STOCK DIVIDEND?
A: To the extent that an elective stock dividend is attributable to a REIT’s current and accumulated E&P, it is viewed as a dividend paid by the REIT. Thus, the entire amount of the dividend (the cash plus the amount of cash that could have been received instead of the common stock) is counted for purposes of the requirement that a REIT distribute a dividend equal or exceeding 90 percent of its REIT taxable income yearly. Further, the REIT receives a dividends paid deduction for the amount of the distribution equal to its E&P so that a REIT has no corporate tax liability if its dividends paid deduction equals its taxable income (a payout of 100 percent of its taxable income).
Q: WILL A SHAREHOLDER BE TAXED AGAIN IN THE FUTURE WHEN THE REIT DISTRIBUTES THE CASH IT RETAINS?
A: As noted above, a REIT distribution (like that of any other corporation) is treated, first, as a dividend to the extent of the REIT’s E&P, then as a return of capital to the extent of a particular shareholder’s tax basis in the REIT stock, and then as an amount received for the sale or exchange of the stock. If the stock were held as a capital asset for at least one year, this latter amount would be taxed at the maximum long-term capital gains rate of 15 percent.
Typically, the distribution of both the cash and stock portions of an elective stock dividend would reduce a REIT’s current and accumulated E&P. Thus, any subsequent distribution of cash by the REIT again would be analyzed in this three-part manner. Any distributions first would be taxable to the extent that the REIT had any accumulated earnings and profits not eliminated by the elective stock dividend and/or current earnings and profits attributable to earnings in the current tax year. Any additional distribution beyond the current and accumulated E&P would be treated first as a tax-free return of capital and thereafter as proceeds from the sale of a capital asset, which would be eligible for tax treatment as a long-term capital gain if the stock was held for more than one year.
For example, assume a REIT retained $1 million in 2009 by virtue of an elective stock dividend and in 2010 generated taxable income and E&P of $1.5 million. If the REIT in 2010 distributes $2.5 million in dividends, $1.5 million would be treated as ordinary income and $1 million would be treated first as a return of capital, which would reduce a shareholder’s tax basis, and thereafter as proceeds from the sale of a capital asset, which would be eligible for tax treatment as a long-term capital gain if held for more than one year.
additional amendment to por filed on saturday:
note that ggp anticipates having $178.9 million of cash on hand at the end of 2010. if this amount is after dividends and dividends are paid as anticipated for 2009 (10% cash and 90% stock) then the $178.9 would represent cash available after the 10% portion for the 2010 dividend has been paid.
whatever the numbers come out to be, the point is that ggp is projecting positive cash flow for 2010 which means to me that dividends will continue to be paid in 2010 and they will have the money to do so.
following is a cut and paste of the new filing which was made saturday morning by kirkland and ellis:
Exhibit 3 – Financial Projections
Capitalized terms used in this Exhibit 3 are defined in Appendix A to the Disclosure
Statement, as supplemented or amended.
For the purpose of demonstrating that the Plan satisfies the feasibility
standard described in Section VIII.A.3 of the Disclosure Statement, the Plan Debtors
provide the attached consolidated cash flow analysis and the following narrative
description.
The Plan Debtors estimate that the Emergence Costs are approximately
$428 million. Of this amount, $319.8 million is associated with the mortgage and
mezzanine debt restructuring, including extension fees, servicer fees and expenses, catchup
amortization payments, accrued interest, the funding of certain escrows and other
expenses. A further $108.2 million is associated with distributions related to prepetition
claims against the Plan Debtors. The Plan Debtors are expected to fund these
restructuring costs and Plan distributions predominately from funds generated by the Plan
Debtors since the onset of their Chapter 11 Cases, with additional support from excess
liquidity of GGP LP. These amounts are the best available estimates as of the date of this
Disclosure Statement supplement and are subject to change based on the final number of
Plan Debtors included or excluded from the Plan and other factors.
As described in Section II.B of the Disclosure Statement, the Plan Debtors
engaged in lengthy negotiations with the Secured Debt Holders. In connection with those
negotiations, in August 2009 the Plan Debtors completed the preparation of long-term
project-level financial projections and provided those projections to the Secured Debt
Holders and other key constituencies in the Chapter 11 Cases, including the professionals
for the Creditors’ Committee and the Equity Committee. The project-level projections
completed in August 2009 show that the Plan Debtors will have cash flow well in excess
of the amounts necessary to satisfy their principal and interest payments under the
restructured secured loans and all other cash needs through 2014. The Plan Debtors’ cash
flow in 2010 is estimated to be approximately $47.4 million less than their cash needs,
due primarily to the $150 million pay-down of the secured debt on the Ala Moana
property as negotiated as part of the restructuring of that entity’s property level secured
loan. GGP expects to fund this shortfall out of excess liquidity of GGP LP. The Ala
Moana pay-down also can be deferred beyond 2010.
The consolidated cash forecast attached shows that GGP has sufficient
cash to fund the Emergence Costs of the Plan Debtors as well as the estimated $47.4
million shortfall in 2010. On a pro forma basis including all estimated Emergence Costs
and other payments required by the Plan, GGP projects it will have $178.9 million in
cash available at the end of 2010.
The Plan Debtors do not, as a matter of course, publish business plans,
strategies, projections, anticipated financial positions, or the results of operations.
Accordingly, the Plan Debtors do not anticipate that they will, and disclaim any obligation to, furnish updated projections or cash flow forecasts, to holders of Claims or
Interests in the Plan Debtors after the Confirmation Date, or to include such information
in documents required to be filed with the SEC (if any) or otherwise make such
information public. The Plan Debtors do, however, continue to update their projections
to reflect actual results, business developments, changes in assumptions, and refinements
to projection methodologies; future projections are likely to differ from those set forth
herein. GGP anticipates incorporating such future financial projections in information
that is delivered to certain constituencies for purposes of the remaining Chapter 11 Cases.
Creditors should not rely on the projections or cash flow forecast as a
representation or guarantee of future performance; they are an estimate done as of August
2009 for purposes of demonstrating feasibility of the Plan and actual results could vary
significantly. The projections and cash flow forecast have not been prepared on the basis
of Generally Accepted Accounting Principles, the rules of the SEC, or the American
Institute of Certified Public Accountants. The projections and cash flow forecast have
not been audited or reviewed by independent public accountants
good general growth/simon article:
http://www.ibj.com/article?articleId=15096
secured will be paid in full. the arrangements for the unsecured debt is still being negotiated but it is also my understanding from what i have read that the unsecured debt will also be paid in full. various articles have said the unsecured debt might be exchanged for equity. i suppose it is also possible that some of the unsecured debt could be paid off, some extended, and some exhanged. with all of the talk about bam and spg being interested, it is also possible that some of the unsecured debt being held by bam or spg could be exchanged for jv interests in some properties.
what assures me that the common will survive is the fact that the bucksbaum family and ackman own or control 50% of the common and i don't see these two groups being left out in the cold. additionally, all financials have shown that equity is in excess of debts (remember, that is why this case has proceeded the way it has in court and that ggp has not been forced to liquidate).
while i believe that common will survive, i also believe there will some degree of dilution to existing common shareholders which will be determined by the valuation of the properties.
as i have posted previously and based on my examination of the detail provided of the legal bills which have been submitted for payment, ggp has hired experts to provide value estimates for the properties. no doubt the unsecured creditors also will have their own experts. if the two sides can not reach a mutual agreement regarding how to place a value on the company's properties, then they will "argue it out in court" and the judge will make a decision.
obviously the unsecured creditors will say their debts are worth 100% of face value and that is what they want to be paid or that they want to exchange that debt for equity of a comparable value. that is where the rub will come. while it's not fair or equitable to say that ggp's stock is only worth $10/share, it may not be fair to say that it is worth $67/share either.
will the unsecured creditors be willing to bet on the come by taking warrants for ggp stock which could be converted to ggp stock (post bankruptcy) at a certain price? will bam end up being a lender to ggp and offer to take out all of the unsecured debt in exchange for a jv position with ggp. will a buffett type come forward with new financing to take out the unsecureds at a sweetheart rate? who knows.
no matter what you think, if the court approves the payment of a dividend to existing common shareholders (as well as the remaining preferreds), then i would take that as about all the proof you might need that the commons will survive. if the unsecureds thought for a moment that they would just take over the company then you could bet they would be filing an objection to the payment of dividends to the existing common shareholders. i don't see that they have filed any objections.
at any rate, i'm long this stock and plan to stay that way despite the fact i'm sitting on a huge paper profit at this point.