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.
