General Growth Properties' $6.15 billion credit facility via Lehman, CSFB, Wachovia, Bank of America

By Sara Rosenberg

New York, Aug. 24 - General Growth Properties Inc.'s proposed $6.15 billion credit facility will be led by Lehman Brothers, Credit Suisse First Boston, Wachovia and Bank of America as joint lead arrangers and joint bookrunners, according to a market source.

Timing and structure on the facility is still to be determined.

The company has received committed financing in the amount of $9.75 billion, including the $6.15 billion loan. The remaining $3.6 billion will be raised in the commercial mortgage backed securities market, the source said.

As was previously reported, the average interest rate of the new debt will be in the Libor plus 225 to 275 basis points range, the majority of debt having a term of three years, with some four-year debt, General Growth chief financial officer Bernie Freibaum revealed in a conference call Friday.

Proceeds, along with $500 million of new equity, will be used to help fund the acquisition of The Rouse Co. for $7.2 billion, including the assumption of about $5.4 billion of Rouse debt, and to redo $2 billion of General Growth's unsecured credit.

The transaction is expected to close in the fourth quarter of 2004.

Post closing, General Growth will have about $23 billion of debt, or about 71% of total pro forma capitalization of $32.5 billion based upon the current stock price. Estimated interest coverage is about 1.6x for the first full year after closing, assuming the transaction closes in the fourth quarter.

Lehman Brothers, as well as Credit Suisse First Boston and Wachovia Bank served as advisers for General Growth, a Chicago-based shopping mall owner.

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