The 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.