$2.5Billion….
No pricing details yet (the reason for the gaps in the text).
NOTES:
New GGP is offering $ aggregate principal amount of its Mandatorily Exchangeable Notes due 2011, which we refer to as “the notes”. The maximum amount of notes that we may issue will be limited to the product of million (representing the maximum amount of shares that we may issue upon exchange of the notes) times the exchange price per share. Therefore, assuming an exchange price of $ per share (the midpoint of the range set forth herein), the maximum aggregate principal amount of notes that we may issue will be $ .
• The notes will mature on January 31, 2011, unless earlier redeemed or exchanged.
• The notes will accrue interest at a rate equal to (i) 0.5% per annum from the date of issuance to and including the 90th day after the issuance and (ii) 1.0% per annum after such 90th day, in each case until the earliest of the mandatory exchange date, the redemption date and the maturity date.
• This offering is being made to replace a portion of the funds to be used to consummate the plan of reorganization of Existing GGP and certain of its subsidiaries. The gross proceeds from the sale of the notes will be placed in an escrow and securities account and held as collateral security for New GGP’s obligations in respect of the notes until the earliest of mandatory redemption, mandatory exchange and the maturity date.
• Holders of the notes will have a first priority security interest in the escrow and securities account and the securities in which the proceeds are invested.
• The notes will rank equally in right of payment with all of New GGP’s other existing and future obligations that are unsecured and unsubordinated to the extent amounts are due on the notes in excess of the escrow amount, if any.
• The notes will be guaranteed on a senior unsecured basis by Existing GGP and such guarantee will rank equally in right of payment with all of Existing GGP’s existing and future obligations that are unsubordinated and will be effectively subordinated to debt secured by Existing GGP’s assets, to the extent of the value of those assets.
MANDATORY EXCHANGE
• Upon the satisfaction of the mandatory exchange conditions (or waiver, to the extent permitted by applicable law, by the holders of a majority in aggregate principal amount of notes), which include, but are not limited to, the consummation of Existing GGP’s plan of reorganization and the consummation of the transactions contemplated by the investment agreement with Brookfield Investor (as described in this prospectus), the notes will be mandatorily exchanged, in whole, but not in part, into shares of New GGP’s common stock, and New GGP will pay in cash accrued interest to, but not including, the mandatory exchange date. We expect the exchange price to be between $ and $ , and the exchange rate to be between approximately and shares of common stock per each $1,000 principal amount of notes.
We expect the net proceeds of this offering to replace $2.15 billion of the financing commitments for New GGP from Fairholme, Pershing Square and Texas Teachers. The investment agreements that Existing GGP has entered into with each of Fairholme, Pershing Square and Texas Teachers commit such investors to invest approximately $2,714.3 million, approximately $1,085.7 million and $500.0 million, respectively, in New GGP common stock. The agreements permit Existing GGP to use the proceeds of a sale of common stock of New GGP, including the common stock underlying the notes offered hereby, for not less than $10.50 per share (net of all underwriting and other discounts, fees and related consideration), to reduce the amount of New GGP common stock to be sold to Fairholme, Pershing Square and Texas Teachers, pro rata as between Fairholme and Pershing Square only, by up to 50% (or approximately $2.15 billion in the aggregate) prior to the effective date of the Plan and as described elsewhere in this prospectus, within 45 days after the effective date of the Plan
Meaning the $10.25 and $10.50 costs basis for the above group is going to go higher as their commitments can only be replaced with better pricing per their agreements. That means the base value ought to go up also….
Why isn’t that being reflected yet. Only guessing but think the markets is taking a “wait and see” attitude. No worries….it’ll happen..