UNITED States property giant Simon Property Group has made a $US10 billion takeover bid for mall operator General Growth Properties.
Started in 1954, GGP currently manages and owns more than 200 shopping malls as well as master planned communities.
In April last year, it filed for Chapter 11 bankruptcy with over $US25 billion of debt – the largest real estate bankruptcy in US history. Chapter 11 is a part of US Bankruptcy Code, which gives a company protection from creditors and restructure.
At the time of the filing, GGP’s portfolio was valued at $US29.6 billion.
Earlier this morning in US time, Simon made a $US9.00 per share offer. This is above the trust’s current share price of $US1.05 – a far cry from its May 26 2008 high of $US43.83.
Simon said the offer will accelerate GGP’s emergence from bankruptcy and fire sale of GGP’s assets should the US-REIT is forced to divest malls to repay its debt obligations.
The Official Committee of General Growth’s Unsecured Creditors has advised Simon that it supports the Simon offer, and encourages General Growth to engage with Simon promptly to allow the proposed transaction to be considered by General Growth’s creditors and shareholders as soon as possible.
Committee Chairman David Simon said Simon’s offer provides the best possible outcome for all General Growth stakeholders.
Meanwhile Committee counsel Michael Stamer said the full cash payment to all unsecured creditors and the substantial recovery for equity holders that Simon has proposed would be a great result. We fully support and encourage prompt engagement by the company with Simon.
The transaction is not subject to a financing condition and would be financed through Simon’s cash on hand and through equity co-investments in the acquisition by strategic institutional investors, with the balance coming from Simon’s existing credit facilities.
Australian Property Journal
