This ought to get the rumor mill flowing at full speed…
– 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.
Most likely scenarios?
- Some asset sales. I am not of the opinion a single buyer takes the whole company. I’m not convinced lenders will be comfortable loading a single buyer with the debt needed to do a deal. I think it more likely GGP goes the JV route with a Brookfield Asset/Properties (BAM, BPO) or Westfield.
- Equity offering. In theory this is done to pay off unsecured creditors. Since they can ONLY receive full value of their claims, the math is pretty simple.
- Debt offering? No. The whole point of this 11 is to delever.
- Simon (SPG) I still think is the odd man out unless they take non-premium locations. Why? There is significant overlap with GGP where Simon has their top assets. IMO, this will create FTC issues. Doesn’t mean they will not be involved in any bidding though and we welcome that to drive up prices.