This guy is too much. He is becoming the new Hovde on this.
First the News:
he chief executive of Simon Property Group Inc (SPG – News) on Thursday said a plan by management of General Growth Properties Inc (GGP – News) to emerge from bankruptcy lacks certainty despite new financial backing.
Simon, the largest U.S. mall owner, last month offered to buy General Growth, the second-largest, for $10 billion in a plan that had support from many General Growth unsecured creditors.
But General Growth on Monday set forth a competing plan to emerge from bankruptcy, under which William Ackman’s Pershing Square Capital Management and fund manager Fairholme Capital Management would invest up to $3.93 billion.
That plan has backing from Canada’s Brookfield Asset Management Inc (Toronto:BAMA.TO – News). Pershing Square is General Growth’s largest shareholder, and Fairholme its largest debtholder.
General Growth had earlier proposed to split in two companies, in a plan under which Brookfield would have invested roughly $2.63 billion in exchange for a 30 percent stake.
That plan also called for General Growth to sell about $1 billion of assets and raise $3.3 billion of equity.
David Simon, the chief executive of Simon Property, on Thursday said the revised plan retains potential pitfalls for General Growth shareholders.
“The first plan had a lot of uncertainty to it, in terms of how it was going to impact shareholders,” Simon said at a New York University conference. “Their added plan eliminates some uncertainty, but not all of it.”
This is the same argument Simon & Co. used in front of the court regarding the unsecured creditors. The argument was that the BAM deal that paid unsecured creditors in cash was to “uncertain” for them and that Simon’s plan was better because it provided for a 100% “certain” cash payout. Now, they of course failed to recognize/acknowledge that at the time GGP’s unsecured debt was trading at or ABOVE par meaning those unsecured creditors who wanted the “certainty” of cash could at that time sell that debt for price equal to or MORE than what Simon was offering them.
Now we turn to the shareholders and we have the same flaccid posturing. Simon is saying his $9 offer ($6 in cash , $3 in GGO) is better than the $15 offer BAM/FAIRX/Pershing (BFP) has put forth because the BFP deal has some uncertainty in it. The deluded thought process is that since the BFP deal is an all stock one to shareholders, the $6 in guaranteed cash he is offering is superior. This fails for the same reason his unsecured creditor argument did. Those shareholders who do not like the “uncertainty” in the BFP deal are free to cash out at $14+ a share today, a 133% premium to the “certain” cash Simon is prepared to pay them and a 64% premium to the “uncertain” $9 he is offering ($3 of that is not “certain”). This is the new “fuzzy math” I guess where $6 > $14.
What Simon either doesn’t realize or does and is just spewing these infantile rants to see his name on a press release is that those unsecured creditors and shareholders who are still holding those positions OR entering positions now are doing so because the WANT to hold shares in a freshly emerged standalone entity called GGP/GGO, not because they want a cash out. Anyone who wants their cash is doing so at prices laughing higher than that David Simon is offering him…
The ONLY person David Simon’s deal is better is David Simon and his shareholder folks, period. His statements that is is better for GGP shareholders or debtholders is nothing short of rank dishonesty and he knows that.
Note to the media: Shame on you for simply parroting back these arguments on both TV and in print. You are doing your viewers/readers a massive disservice. Do a little homework and look into it at a level even just below the surface. You might be surprised what you find. Actually I know you will since you have been dead wrong on this since $.42 a share a year ago. No reason to expect anything different now. Do you really wonder why you are hemorrhaging market share to blogs?
Maybe anyone of you want to call David Simon and ask him about ANY of the points raised here?