General Growth Properties (GGP) on Tuesday filed a reorganization plan with a bankruptcy court, which will split the company into two publicly-traded entities that will emerge from bankruptcy by the end of October.
GGP, which has restructured roughly $15 billion in debt since last December, filed the plan with the U.S. Bankruptcy Court for the Southern District of New York. Under the plan, GGP will split into General Growth Properties, or “new GGP,” and Spinco, with current shareholders receiving common stock in both companies. Spinco will be run by its own separate board of directors and management team.
Brookfield Asset Management, Fairholme Capital Management and Pershing Square Capital Management have committed $8.55 billion in capital. As much as $6.3 billion will serve as new equity for the new GGP; $1.5 billion will be a backstop debt commitment for the new GGP; $500 million will serve as an equity backstop for a $10 per share rights offering for the new GGP; and $250 million will be a backstop equity commitment for a Spinco $5 per share rights offering.
General Growth has also come to an agreement with the Teacher Retirement System of Texas, which will invest $500 million in shares of new GGP common stock at $10.25 per share.
General Growth filed for bankruptcy in April 2009 after struggling to manage the massive $27 billion debt burden it had accumulated with large acquisitions and failing to execute several exchange offers. It won a waiver from creditors that would have forgiven missed payments for the rest of the year, but that waiver was conditional on the success of the failed exchange offers. General Growth obtained approximately $375 million in DIP financing from Pershing Square, which is headed by activist investor William Ackman.
UBS and Miller Buckfire served as financial advisors to General Growth.