TRS Investing $500 Million in GGP
General Growth Prepares to Emerge from Bankruptcy
July 13, 2010
The Teacher Retirement System of Texas (TRS) has agreed to invest $500 million in the reorganized General Growth Properties (GGP) in exchange for equity at $10.25 per share. Subject to Bankruptcy Court approval, the agreement would provide GGP with more capital as it emerges from Chapter 11.
GGP forged initial investment agreements with Brookfield Asset Management, Fairholme Funds and Pershing Square Capital Management, which resulted in a backstop provision for $1.5 billion of debt and $500 million of equity required for bankruptcy emergence. However, GGP is currently exploring alternative financing options to maximize its equity value, post-bankruptcy.
"Although we previously obtained sufficient capital commitments to enable us to emerge from Chapter 11, this transaction expands and diversifies our ownership base on attractive terms and preserves our ability to continue to seek more favorable equity investments," said Adam Metz, CEO of GGP. "We continue to make excellent progress with our restructuring plan and are well on our way to exiting Chapter 11 by October of this year."
TRS is only investing in the reorganized GGP. The investment does not include any interest in a new company that is to be spun-off to shareholders after GGP emerges from Chapter 11.
UBS Investment Bank and Miller Buckfire & Co. LLC advised GGP. Weil, Gotshal & Manges LLP acted as legal counsel.