Simon Proposal: Additional $2.1B in Capital

Simon Property Group has upped the ante on its April 14th proposal to buy bankrupt retail owner General Growth Properties. The company said on Thursday that in addition to its investment of $2.5 billion at the same per share price as the reorganization plan sponsored by Brookfield Asset management, it has received a $2.1 billion commitment from Paulson & Co., ING Clarion Real Estate Securities, Oak Hill Advisors, RREEF and Taconic Capital Advisors.

April 22, 2010
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user LancerE

Simon Property Group has upped the ante on its April 14th proposal to buy bankrupt retail owner General Growth Properties. The company said on Thursday that in addition to its investment of $2.5 billion at the same per share price as the reorganization plan sponsored by Brookfield Asset management, it has received a $2.1 billion commitment from Paulson & Co., ING Clarion Real Estate Securities, Oak Hill Advisors, RREEF and Taconic Capital Advisors.

Simon reiterated its assertion that the bid is superior to that of Brookfield and partners Pershing Square and Fairholme Capital. It noted that the company has agreed to backstop a $1.5 credit facility necessary for General Growth to close and emerge from bankruptcy, along with agreeing to limits on its governance rights. It would also waive a $12.5 million fee that would be levied by Brookfield et al for their commitment to General Growth, and would pay the holders of General Growth’s unsecured cash claims equal to the amount of accrued and unpaid pre-petition and post-petition interest.

“Our amended proposal delivers significantly higher value and substantially greater certainty of closing to GGP and all of its stakeholders than the transaction proposed by Brookfield Asset Management,” Simon chairman and CEO David Simon wrote to General Growth CEO Adam Metz.

Per the proposal, Simon would acquire 250 million shares of common General Growth stock, fully backstop the additional 380 million shares of common stock to be issued in the firm’s reorganization and recapitalization, fully backstop the $1.5 credit facility that would form a part of General Growth’s post-capitalization balance sheet, and fully backstop the rights offering to a spinoff of General Growth.