DealZone

Simon takes fresh tack in bidding battle for bankrupt GGP

Simon Property says it is teaming up with hedge fund Paulson to try to unseat Brookfield Asset Management as the key investor in General Growth Properties as the mall operator angles toward an exit from its bankruptcy.

Simon said it and Paulson would invest $2.5 billion to help General Growth exit bankruptcy, and more importantly, make the investment without taking any warrants to buy shares like Brookfield and other investors have under its current plan, Paritosh Bansal reports.

Paulson, the $32 billion hedge fund run by billionaire investor John Paulson, has made a commitment to co-invest $1 billion with Simon. Sources told us earlier this week that Simon was looking at ways to revise its offer for GGP, which was seen getting hung up on anti-trust concerns.

GGP filed for bankruptcy protection nearly a year ago. It has submitted a proposal to emerge from bankruptcy court backed by three large investors. Under that plan, General Growth would emerge as an independent company. It set an April 22 deadline for objections to the plan.

Paulson’s money goes up against Pershing Square Capital Management and investment manager Fairholme Capital Management, which committed about $3.9 billion at $15 per share to General Growth. General Growth would give these investors warrants for 60 million shares in return for their equity commitment.

After listing, General Growth attracts more interest

Fairholme Capital Management and Pershing Square, two key investors in General Growth Properties, have offered to invest another $3.93 billion in the mall operator to help it emerge from bankruptcy. Shareholders, who only had access to the stock again on the NYSE as of last Friday, bid the stock more than 4 percent higher in early Tuesday trade.

While the new offer does not knock out the one from GGP rival Simon Property Group, it could get more support among unsecured creditors who would have had to settle for cash and stock under GGP’s original proposal.

The latest deal builds on one from Brookfield Asset Management but now allows General Growth to remain an independent company instead of selling itself to Simon, its largest competitor.