Category: Premium Articles

They are a treasure trove of interesting tidbits….

From GGP’s Filing today:

• BAM offer good through 12/31 but Fairholme and Pershing may pull out after 11/1 should GGP go with a competing plan.
• First Round Bids DUE 4/19
• GGP expect to choose final offer and submit to court around 7/2

PAGE 7:

On March 3, 2010, General Growth began working with strategic investors interested in pursuing an M&A transaction and financial investors that could sponsor a standalone emergence (collectively, the “Interested Parties”) by providing them access to reasonable due diligence in connection with their potential submission of non-binding, detailed term sheets (“Term Sheets”) on or before April 19, 2010 at 3:00 p.m. (Eastern Time) (the “First Round Bid Deadline”). General Growth will continue to provide Interested Parties with access to information contained in the Data Room or as otherwise requested.6 This exchange of information with Interested Parties is robust and ongoing.7 General Growth has also affirmatively contacted certain parties that have expressed an interest in making a proposal or whom General Growth believes may have an interest in making a proposal and will provide requests for proposals and confidential information memoranda to these parties shortly

Foot notes:
6 Certain information may be restricted due to anti-trust or other concerns.
7 Based on the diligence made available by General Growth and the exchange of information
referenced above, each party that submits a Term Sheet by the First Round Bid Deadline (the “First Round Bidders”) is deemed to acknowledge and represent that it has had an opportunity to conduct due diligence on General Growth in connection with the first round prior to making its first round proposal; and that it solely relied upon its own independent review, investigation and/or inspection of any documents and/or the assets in making its proposal; and that it did not rely upon any written or oral.

PAGE 8:

Contemporaneously with the first round of bidding, General Growth continues to actively engage market participants in an effort to maximize value for its stakeholders by obtaining binding benchmark proposals that either enhance the REP Agreement on terms equivalent or superior to the Fairholme/Pershing Agreements or that replace the REP Agreement and/or the Fairholme/Pershing Agreements.

Simply stated, General Growth will conduct the broadest competitive process to obtain investments from parties who can complete their due diligence quickly and submit binding benchmark proposals for the opportunity to coinvest and/or provide capital on more competitive terms before other prospective acquirers and/or investors submit Term Sheets at the First Round Bidding Deadline.

PAGE 9, NEW TIMELINE:

PAGE 20, Value of Warrants:

PAGE 37 First Round Bidding:

The following procedures (the “Bidding Procedures”) will govern the competitive process run by General Growth Properties, Inc. (“GGP”), and its debtor and nondebtor affiliates (collectively, “General Growth” or the “Company”) to maximize the value of its estates by soliciting proposals for:
(i) a purchase of all or substantially all of the Company (an “M&A Transaction”);
(ii) a purchase of a significant portion of the Company’s assets (an “Asset
Purchase”); or
(iii) an investment of all or a portion of at least $1.5 billion of equity capital (a “Plan
Sponsor Investment”); provided, however, that such bids are subject to a
minimum investment of $100 million.

Each Term Sheet must contain detailed descriptions of the M&A Transaction, Asset Purchase, Plan Sponsor Investment and Plan (collectively, as applicable, the “Transaction”) that are the subject of such Term Sheet. Subject to the applicable confidentiality agreements or provisions, the Company and its professionals will share the Term Sheets received during the first round with the advisors to the official committee of equity security holders and the official committee of unsecured creditors (collectively, the “Committees”).

The Company will review those Term Sheets timely submitted and engage in negotiations with those prospective acquirer and/or investors that submitted Term Sheets complying with the preceding paragraph and as it deems appropriate in the exercise of its business judgment, subject to consultation with the Committees. The Company will select, in its business judgment and after consultation with the Committees, those proposals qualifying for the second round on or before April 28, 2010.

Short answer here is that things ought to get moving very quickly now for those want stalking horse status. We are now 27 days away from the 28th and in all reality anyone who is serious will want to get bids in sooner rather than later so that any discussions necessary can be had.

PAGE 41, Second Round Bidding Process:

PAGE 151, GGO Assets:

Those are some very good assets in GGO and I will continue to say this until it is recognized. Now, they have also been ignored by GGP as they have gone through the 11 process. This is not a knock on GGP, just a fact of life and what had to be done at the time.  But, in the right hands with some financial backing, these asserts, not yet fully developed, can become a goldmine. Now, if we only had someone with 30 years experience in developing these assets with some financial strength to take them over.  Somebody like, oh, I don’t know….Brookfield Asset Management!!??!!

Now 2009 produced no NOI from these assets and it is unlikely 2010 will be any better as not much will happen with them until emergence. If we are really lucky the $5 share price (assuming current offer stands) craters upon emergence and we can pick up a bunch on the cheap.  One can hope… 😉

Been also getting messages about the stock price. People are worried as to what it is going to do between now and October. When I answer these, you need to know where I come from . I don’t care. What ??!!?? Don’t care??!!?? Why? There are only really three scenario’s for the company.

1- Buyout scenario. I can’t fathom where Ackman and others even consider for a second a buyout offer lower than the $22 range. Because of that, I know if that is the scenario, I win big in short order.

2- Low ball buyout offer: It is rejected and we simply wait to emerge and have holdings in GGP/GGO that are worth substantially more than the $15 currently valued at. The reasons for liking this have been discussed here relentlessly. Long term, the gains here are still stunning.

3- No other buyout offer: See #2

That is really it. For those reasons I just can’t get all worked up either way when the stock gyrates around and people begin to panic as to the why’s. It gonna do what its gonna do, what WE need to recognize is that no matter what happens in the above scenarios, now that creditors have ZERO say in the process, we win. Getting caught in the day to day action will cause you to do something rash, like selling shares now, only to see a far higher bid come in early next week and you then miss out on the upside.

We have done our work, our thesis has been proven right and our patience over the past year has been rewarded. Now it is time to sit back, look at the offers and either sell our shares far higher than current prices now OR hold them for even greater gains down the road…. life’s a bitch, huh?!??

Enjoy your Easter weekend everyone…