heavy lifting, part 3:
a review of the current application for payment by kirkland and ellis for the month of september indicates that over 60% of their billing was a result of work on the plan of reorganization. this work included:
revising loan documents and agreements;
draft a memorandum of law on the plan of reorganization issues;
preparing and compiling binders which contained loan summaries, term sheets, and various loan documents;
review and revision of potential lender presentation re: exit strategies;
reveiw and analyze cmbs prospectuses for each project-level term sheet; and,
drafing non-disclosure agreements for the various secured lenders.
it is very apparent that ggp is steamrolling this process so that they can exit bankruptcy soner rather than later.
regarding the speculation surrounding simon and others attempting to "buy out" ggp, i'm afraid they may be a day late and a dollar short.
the court has given ggp the exclusive right to submit a plan of reorganization and they have until the feb/mar 2010 timeframe to do so. therefore, regarding some reports that simon has contacted some of the ggp lenders, i think they should be careful. if ggp thinks for a moment that simon, or anyone else for that matter, it attempting to interfere with ggp's negotiations with its lenders, i don't believe for a moment that ggp would hesitate to march in to judge gropper and get any recalcitrant lenders back in line.
gropper made it abundantly clear that he expected the lenders and ggp to negotiate extensions and get ggp out of bk. simon has no status at this time to interfere with this process. that doesn't mean that simon can not express an interest in acquiring all or part of ggp, but that would only be after ggp emerged, in my opinion.
what the simon news has served to do is give credence to the fact that ggp WILL emerge from bk and that the assets will be intact, along with the shareholders. it is apparent from looking at the legal and consulting invoices that the process is close to coming to fruition. maybe the speculation that an agreement could be reached by next week is not too far off. i really think the best simon, or anyone else, can do is offer a per share price with an agreement that they will assume all of the debts (with the extensions negotiated during this bk process) and just step in in place of ggp.
that would be a sweet deal if they could get it but i just don't think the bucksbaums and ackman will agree with that. why should they? if the debt is extended for 3-5-7-9 years, ggp would be in the catbird seat. no loans coming due, positive cash flow, and a good long time to get the balance sheet healed by paydown of debt or selected sale of properties which won't have to be at a firesale.
i had previously posted that i thought the stock could reach as high as $8 before the por was announced. if there is continued fire fanning by the likes of simon then the pre-emergence price could hit dbl digits.
the stock flew today on speculation, imagine what will happen if/when the loan renegotiations are announced.
on the cautionary side, remember that ggp is apparently requiring the secured lenders to sign non-disclosure agreements so we may not get any timely news on loan extension agreements until much closer to the time the por is to be announced. all said and done, this stock should continue trending up while being subject to more volatility than other reits because of the bk status.
if you are long, you gotta love it though.
AI
