General Growth still backing Brookfield despite new Simon bid

Back to TopCommentsE-mailPrintBookmark and Share

General Growth Properties Inc. backed the latest financing proposal from a group led by Brookfield Asset Management Inc. in court Friday, rejecting Simon Property Group Inc.’s “best and final” offer.

The Brookfield-led plan is better than Simon’s, General Growth President Thomas Nolan said in testimony read in U.S. Bankruptcy Court in Manhattan Friday. Lawyers for Simon, the largest U.S. mall owner, said the company will withdraw from bidding if U.S. Bankruptcy Judge Allan Gropper approves the Brookfield plan, partly because the stock warrants that accompany it would make Simon’s buyout more expensive.

General Growth stock fell as much as 13 percent Friday in New York trading.

Under the revision introduced Friday, Brookfield’s investment partner Pershing Square Capital Management LP would forgo any warrants until General Growth’s reorganization is complete, and Toronto-based Brookfield would increase the strike price on its warrants to $10.75 from $10.50, General Growth lawyer Marcia Goldstein told Gropper. Another partner, Fairholme Capital Management LLC, also would get warrants.

The hearing comes a day after Indianapolis-based Simon stepped up its three-month quest to acquire General Growth by making a $6.5 billion bid for the Chicago-based company. Brookfield’s rival proposal would leave General Growth an independent company.

Simon’s offer is valued at $20 a share, the company said Thursday in a statement. It consists of $5 in cash, $10 in shares of Simon stock and the distribution of shares in a new company, General Growth Opportunities, valued at $5.

“These offers are best and final,” Simon CEO David Simon said in a letter to General Growth’s board. Simon “will not participate in the bidding process in the GGP bankruptcy proceeding in any way once GGP commits to issue the warrants associated with the latest Brookfield-sponsored plan.”

Pershing Square’s CEO William Ackman responded Friday with a letter to the General Growth board offering to forgo 17 million interim warrants. Ackman made the offer in an effort to push through Brookfield’s plan, saying Simon’s bid posed antitrust risks because it would link the nation’s two largest mall owners.

Simon estimates the warrants could cost General Growth shareholders $895 million. Ronen Bojmel, a managing director at General Growth’s financial adviser Miller Buckfire & Co., testified Friday that they would be worth about $688 million.

Simon’s original bid on Feb. 16 would have given General Growth stockholders $9 a share, including $6 in cash. That was turned down as too low. Both that plan and the new one pay all General Growth unsecured creditors, who hold about $7 billion in debt, in full.

General Growth filed the largest real estate bankruptcy in U.S. history in April 2009 after amassing $27 billion in debt making acquisitions. Its properties include New York’s South Street Seaport, Boston’s Faneuil Hall and the Grand Canal Shoppes and Fashion Show in Las Vegas.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Can your dog sign a marriage license or personally state that he wishes to join you in a legal union? If not then no, you cannot marry him. When you teach him to read, write, and speak a discernible language, then maybe you'll have a reasonable argument. Thanks for playing!

  2. Look no further than Mike Rowe, the former host of dirty jobs, who was also a classically trained singer.

  3. Current law states income taxes are paid to the county of residence not county of income source. The most likely scenario would be some alteration of the income tax distribution formula so money earned in Marion co. would go to Marion Co by residents of other counties would partially be distributed to Marion co. as opposed to now where the entirety is held by the resident's county.

  4. This is more same-old, same-old from a new generation of non-progressive 'progressives and fear mongers. One only needs to look at the economic havoc being experienced in California to understand the effect of drought on economies and people's lives. The same mindset in California turned a blind eye to the growth of population and water needs in California, defeating proposal after proposal to build reservoirs, improve water storage and delivery infrastructure...and the price now being paid for putting the demands of a raucous minority ahead of the needs of many. Some people never, never learn..

  5. I wonder if I can marry him too? Considering we are both males, wouldn't that be a same sex marriage as well? If they don't honor it, I'll scream discrimination just like all these people have....