General Growth has deal to exit bankruptcy

LOS ANGELES -- The nation's second-largest shopping mall operator, General Growth Properties Inc., said Wednesday it reached a deal with Canada's Brookfield Asset Management Inc. that will speed its exit from Chapter 11 bankruptcy protection.

Speculation raged for weeks that General Growth might turn to Brookfield, which has been looking to expand its slate of U.S. retail properties and last year acquired an undisclosed stake in the company.

General Growth, in turn, could thwart last week's $10 billion takeover bid from Simon Property Group Inc. The No. 1 shopping mall operator controls some 382 properties worldwide.

In Las Vegas, General Growth owns the Boulevard and Meadows malls off the Strip. Along the resort corridor, the company owns the Fashion Show mall, the Grand Canal Shoppes at The Venetian and the Shoppes at Palazzo. General Growth also owns The Howard Hughes Corp., which is developing Summerlin. A major regional mall the company was building at Summerlin Centre is on indefinite hiatus.

General Growth rebuffed the unsolicited offer from Simon for being too low.

A spokeswoman for Simon, which owns the Forum Shops at Caesars, downtown's Las Vegas Premium Outlets and the Las Vegas Outlet Center on Las Vegas Boulevard South, didn't have an immediate comment.

General Growth owns or manages 200 shopping malls in 44 states. The company racked up $27 billion in debt by the time it sought shelter from creditors last April, making it the largest real estate bankruptcy case in U.S. history.

Last year, the company restructured more than $13 billion in secured debt, which enabled 108 of its properties to emerge from bankruptcy.

As part of the new plan, General Growth would spin off some assets as a new company named General Growth Opportunities, which would essentially hold assets the company concedes aren't currently producing much income, including the company's master-planned communities and some large retail hubs, such as the South Street Seaport in New York.

The pact with Brookfield would allow General Growth to raise the money it needs to pay off some $7 billion in debt and interest to its creditors. Stockholders would get $15 a share.

Brookfield is majority owner of Brookfield Properties Corp., one of the world's biggest owners of office properties. Brookfield would invest $2.6 billion in cash in exchange for General Growth shares. That would give Brookfield a roughly 30 percent stake in General Growth and the right to nominate three directors to the board.

The agreement is subject to approval by a bankruptcy court judge, and creditors and shareholders. A hearing is set for Monday.

Shares in Chicago-based General Growth slipped 8 cents, or 0.62 percent, Wednesday to close at $12.89 on the Over-The-Counter Bulletin Board. Shares in Indianapolis-based Simon fell 38 cents, or 0.49 percent, to $77.53 on the New York Stock Exchange. Brookfield shares dipped 5 cents, or 0.22 percent, to $22.79 on the NYSE.