Simon Property CEO decries General Growth's 'lack of urgency' in considering $10 billion offer

By Caroline Salls

Pittsburgh, Feb. 17 - General Growth Properties, Inc.'s chief executive officer received a letter from Simon Property Group, Inc.'s chairman and chief executive officer expressing concerns about General Growth's "lack of urgency" in considering Simon's $10 billion acquisition offer, according to a Simon news release.

The letter was sent by Simon chairman and CEO David Simon to General Growth CEO Adam Metz.

Simon said it was wrong of General Growth to characterize the offer as an indication of interest, arguing that the offer is "a firm, fully financed $10 billion offer that provides immediate 100% cash recovery of par value plus accrued interest and dividends to all unsecured creditors, plus more than $9.00 per share in value to shareholders."

"Our offer has no financing contingency and can be completed quickly," Simon said in the letter. The credibility of Simon Property Group as an acquiror speaks for itself, no one has completed more mergers and acquisitions in the retail real estate industry."

Simon also said the offer is "far superior to any third-party proposal or stand-alone plan that would result from [General Growth's] process."

"Proceeding expeditiously to complete our transaction would prevent an extended period of market risk for your stakeholders," Simon said.

"In addition, our offer would remove the serious downside risks associated with a recapitalization, the value of which would be inherently uncertain and subject to future market conditions, even if a recapitalization could be secured.

"Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your company's past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders."

Simon said his company has tried to explore a transaction with General Growth for months, but those attempts have been put off in favor of an alternative exploration process.

"While you pay lip service to time being of the essence, the process outlined in your letter will take many months before a transaction could be agreed and made available to stakeholders," Simon said in the letter.

"Our offer is fully financed and we are prepared to complete confirmatory due diligence within 30 days, during which time we are also prepared to negotiate and enter into a definitive agreement that will bring certainty to the closing of a transaction.

"We are unwilling to waste our time and resources in a process not conducted on a level playing field, that is dragged out to provide an unfair advantage to any party, or that will serve any agenda other than maximizing return for General Growth's stakeholders - while also minimizing the risk and uncertainty of needlessly extending the bankruptcy proceedings."

General Growth, a Chicago-based real estate investment trust that owns regional shopping malls, master planned community developments and commercial office buildings, filed for bankruptcy on April 16, 2009 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 09-11977.

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