General Growth gets $3.93 billion bid from Fairholme, Pershing Square

New York, March 8 - General Growth Properties, Inc. said it received a proposal for $3.925 billion of new equity from Fairholme Capital Management, LLC and Pershing Square Capital Management.

The offer is at a value of $15.00 per share and is intended to help the company exit bankruptcy.

Under the proposal, $3.8 billion would be used to purchase shares of General Growth stock at $10.00 per share, and $125 million would be used to backstop the remaining portion of a $250 million rights offering by General Growth Opportunities, a new company that will own certain non-core assets, at a price of $5.00 per share.

General Growth would have the right to reduce the $3.8 billion by $1.9 billion to the extent it is able to raise equity capital on more attractive terms.

General Growth said that the offer, along with the $2.625 billion proposal previously announced from Brookfield Asset Management, Inc., would provide more than $6.5 billion of equity capital.

Combined with a planned $1.5 billion debt issuance, or the reinstatement of a similar amount of debt, the funding would provide all the cash that General Growth needs to exit bankruptcy and pay unsecured creditors at par plus accrued interest, the company said in a news release.

Fairholme is one of General Growth's largest unsecured creditors and Pershing Square is one of the larges equity holders and a "significant" unsecured creditor, according to the company.

General Growth said it board will study the proposal.

Pershing Square's William Ackman resigned from General Growth's board in connection with his fund's proposal.

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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