DealZone

General Growth’s collapse

April 16, 2009

mallThe modern shopping mall is the cathedral of consumer prosperity, so news that U.S. shopping mall owner General Growth Properties sought bankruptcy protection, capping a months-long effort to cope with a $27 billion debt load, is something of a seminal event in the global economic crisis.

The story of the second-largest U.S. mall owner reflects the larger trend in today’s credit-stifled economy: companies that loaded up on debt in better times and have been struggling to refinance so they can cover their payments. Many have succumbed to Chapter 11 after frequent negotiations with lenders, and many more are expected to.

It’s even worse for shopping malls. Commercial-property values have sunk, and the U.S. retail market is hurting. Many analysts say General Growth could survive a lengthy bankruptcy without resorting to a liquidation, but would have to sell off some properties. That could consolidate power in the mall industry if major players like Simon Property Group, Westfield Group and Taubman Centers could cherry-pick some of the assets.

Deals of the Day:

* EBay Inc offered to buy South Korean online retailer Gmarket Inc for up to $1.2 billion through a cash tender offer and already secured 67 percent of Gmarket, as Yahoo Inc and Interpark had agreed to the tender offer.

* Japanese chipmakers NEC Electronics and Renesas Technology are in the final stage of merger talks, four sources said, the latest shakeout in an industry wracked by a huge chip glut and a slump in prices.

* American International Group Inc is close to a deal to sell its U.S. auto insurance business to Swiss insurer Zurich Financial Services for roughly $1.5 billion, a source familiar with the matter said.

* Software maker Macrovision Solutions Corp agreed to buy Muze Inc for $16.5 million in cash to boost its entertainment-information products portfolio, and it raised its 2009 revenue outlook to reflect the deal.

* British renewable energy company Novera Energy Plc said it sold its East London Sustainable Energy Facility (ELSEF) to Biossence Ltd for 1.25 million pounds ($1.87 million) to focus on onshore wind energy projects.

* Aderans Holdings first traded 10.6 percent higher after the Nikkei business daily reported Japanese private equity fund Unison Capital is set to bid for a stake of at least one-third of the wig maker.

* PICC Property & Casualty, China’s top non-life insurer, said on Thursday American International Group has no intention of selling its stake in the Chinese insurer.

* India’s Company Law Board (CLB) approved the takeover of fraud-hit Satyam Computer Services Ltd by mid-sized outsourcer Tech Mahindra Ltd, as had been expected.

* The chairman of Spain’s Telecinco has said the company was holding informal merger talks with rivals Cuatro and La Sexta, local media reported.

* Japanese chipmakers NEC Electronics and Renesas Technology are in the final stage of merger talks, four sources said, the latest shakeout in an industry wracked by a huge chip glut and a slump in prices.

* Loss-making General Motors unit Saab Automobile said on it had signed confidentiality agreements with 27 potential suitors in its efforts to find a new owner to help it survive the downturn.

* British stockbroker Blue Oar Plc said it was considering making a cash offer for financial services group Dowgate Capital Plc.

* China-focused Prosperity Minerals Holdings Ltd said its Chief Executive David Wong had signed a memorandum of understanding to transfer his 53 percent stake in the company to Prosperity International Holdings Ltd in a stock deal.

Comments
2 comments so far | RSS Comments RSS

I am a small business owner, …… no help from banks or government of any kind or shape. I kept all my employees and added 3 part timers during the past 6 months. Can anybody reward success!!! I pay more taxes, I hire more employees, I work 6 days per week -60hours per week for 11 years- For how long the government will keep subsidizing failures and greed? Can the government protect small successful businesses from greedy banks ?? Banks cut my credit lines, increased interest rates without cause, declined my growth loan applications, and much more.

Is the government will use my tax dollars to bail out GG?

Posted by Joseph Abraham | Report as abusive
 

It’s a shame that GGP General Growth Properties had to file for bankruptcy. GGP has an amazing portfolio of properties and a great track record to go with it. They are one of the best mall opearators in the world. I hope they come out of bankruptcy soon.

Posted by James | Report as abusive
 

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