PrefBlog

Brookfield is now the official stalking horse for General Growth:

General Growth Properties Inc., the bankrupt U.S. mall owner, won court approval of a sale process that makes a group led by Brookfield Asset Management Inc. the lead bidder, beating an offer by Simon Property Group Inc.

U.S. Bankruptcy Judge Allan Gropper in Manhattan today approved General Growth’s plan to give Brookfield, Fairholme Capital Management LLC and Pershing Square Capital Management LP warrants to buy stock in the reorganized company in exchange for funding. Testimony at today’s hearing focused on whether the warrants might chill bidding.

General Growth, based in Chicago, said the Brookfield-led bid is intended to serve as a so-called stalking-horse for higher offers or the raising of money from capital markets. Simon said the warrants would dilute General Growth’s value and the Indianapolis-based company would stop bidding if Gropper approved their issue.

The deal has been previously discussed on PrefBlog.

Dominion Bond Rating Service has commented:

In a revision to the offer this week, Brookfield, Fairholme Capital Management, LLC and Pershing Square Capital Management LP (on a several basis) agreed to backstop an additional $2 billion in capital, which includes $1.5 billion of debt and a $500 million equity rights offering. The $1.5 billion is the same amount that had originally been proposed under a new credit facility. With this modification, Brookfield would backstop $600 million of the $1.5 billion in debt issuance and $350 million of the $500 million rights offering.
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DBRS has received comfort from Brookfield concerning its ability to fund its portion of the transaction should it proceed under the current terms, and believes that the Company can create the needed liquidity without materially increasing leverage at the corporate level. If Brookfield further revises its offer going forward, DBRS would review the terms to determine if there were any the rating implications.

This entry was posted on Friday, May 7th, 2010 at 8:03 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.