Thursday, August 20, 2009

General Growth Bankruptcy Update Three

According to this story by Ilaina Jonas in Reuters today, General Growth Properties cleared the last major hurdle to its reorganization attempts. Judge Allen Gropper, the bankruptcy judge overseeing GGP, recently “refused to allow lenders to strip out some of the malls from the bankruptcy case.”

That ruling, coupled with the extension granted earlier this summer, puts the ball squarely back in GGP’s court to renegotiate the terms of its heavy debt load and emerge from bankruptcy by next spring.

“William Ackman, head of hedge fund Pershing Square Capital Management and one of the company's largest shareholders, wants lenders to extend the company's secured and unsecured loans by seven years, allowing General Growth to strengthen its balance sheet and the capital markets to recover.”

Despite this positive news for the company, speculation continues about a possible takeover of the company by the largest mall operator in the country, Simon Property Group.

“In a conference call earlier this month, Chairman and Chief Executive David Simon said his company would consider property purchases or an acquisition of an entire REIT. Simon has access to $6.3 billion in cash.”

Regardless of the eventual outcome, those savvy investors who snapped up shares of GGP back in February have already realized a windfall. Today the stock is trading at $2.70.