General Growth Properties Inc. (NYSE: GGP) reported Monday it supports a revised offer of more than $6.5 billion by a group led by Brookfield Asset Management (NYSE: BAM) to help General Growth escape from Chapter 11 bankruptcy court protection, according to Associated Press.
General Growth said it prefers the offer by Brookfield, Pershing Square Capital Management and Fairholme Funds over a proposal by rival Simon Property Group (NYSE: SPG) because it is the "overall best transaction for the company," according to a filing Monday in federal bankruptcy court in New York.
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General Growth, the nation's second-largest mall operator with more than 200 centers in 43 states, was the largest real estate bankruptcy in U.S. history.
Under terms of the Brookfield-led proposal, General Growth seeks to exit bankruptcy as two separate companies: General Growth Properties, which will own traditional shopping mall properties, and General Growth Opportunities, which will own a diverse asset portfolio.
Brookfield and the other investors have agreed to commit $6.3 billion of new capital at $10 per share for General Growth Properties and $250 million to backstop a rights offering for General Growth Opportunities at $5 per share.
One change from the original Brookfield proposal is that investors have agreed to backstop an additional $2 billion of capital to be raised at closing, including $1.5 billion of debt and a $500 million equity rights offering.
The Brookfield plan includes 120 million seven-year warrants for reorganized General Growth stock at an exercise price of $10.50, which is an increase from $10, and 80 million seven-year warrants for General Growth Opportunities at an exercise price of $5.
The sweetened deal from the Brookfield group comes after Simon made changes to its offer in late April.
In Monday's court filing, General Growth's said it received a "whole company transaction" proposal from Simon on Sunday. Details of that offer were not immediately known.
Shares of General Growth rose $1.08, nearly 7 percent, to $16.78 on Monday. Simon Property Group gained $3.76, or 4 percent, to close at $92.78.
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