Hard to keep up with the news on this it is coming so fast…
Link to full article from the WSJ:
Brookfield Asset Management Inc. (BAM) and Simon Property Group Inc. (SPG) have bought portions of General Growth Properties Inc.’s (GGWPQ) bank debt and bonds to position themselves to make bids for all or part the mall giant, which has been operating under bankruptcy protection, people familiar with the matter say.
A group led by Brookfield, the Toronto-based property owner that has long sought to buy a U.S. retail-property portfolio, has purchased “close to $1 billion” of General Growth’s unsecured debt in recent months, these people say. Brookfield is hoping to convert that debt into equity and is considering putting up more capital to help General Growth pay some or all its remaining $7 billion in unsecured debt to exit from bankruptcy next year, they say.
It isn’t known how much of General Growth’s debt Simon has purchased, but Simon has held talks with other General Growth debtholders about possibly buying their positions as part of a potential bid to buy the company, these people say. Simon wants to acquire all of General Growth, not individual assets, a separate person familiar with the matter said. Neither Brookfield nor Simon has made a proposal to General Growth’s board, which remains in control of the bankruptcy case and plans to submit a plan by February for exiting chapter 11.
Representatives of General Growth, Brookfield and Simon declined to comment. By amassing positions in the unsecured debt Simon and Brookfield will get to vote when General Growth’s plan for exiting bankruptcy is presented to creditors. General Growth’s stock rose $1.03, or 15%, to $7.98 in 4 p.m. trading on the Pink Sheets.
The rivals’ maneuvering sets the stage for a takeover battle for General Growth, whose 200 malls make it the second-largest U.S. mall owner, behind Simon. General Growth, based in Chicago, sought Chapter 11 bankruptcy protection in April after failing to finance portions of its $27 billion in debt as they came due. General Growth took 166 of its malls into bankruptcy with its parent company.
Most of General Growth’s malls are healthy and thus coveted by its rivals. The company collapsed because it couldn’t refinance its hefty debts as they matured during the capital crisis of the past two years, giving rivals an opportunity to buy a portfolio of solid malls at a distressed price.
So, is this going to be part of the investment fund with Brookfield Properties (BPO)? Is it bad for shareholders? No. Any bidding for assets will only inflate the prices of them and that is good for current shareholders.
Lets not forget Ackman own both equity and preferred debt but has far more upside potential in the equity. Being on the board also, one has to fell rather confident that he will look out for what is best for current shareholders owning 26% of those shares himself.
Gonna be a fun holiday season folks…..