By Paritosh Bansal and Ilaina Jonas
NEW YORK, April 22 (Reuters) - Simon Property Group Inc said on Thursday it improved its offer to help fund rival General Growth Properties Inc's exit from bankruptcy, as it moved to elbow a competing bid by Brookfield Asset Management Inc out of the way.
The revised offer, which was sent to General Growth in a letter late on Wednesday, came as Simon prepared to make a pitch before General Growth's board on Thursday to persuade them to choose its offer over a plan backed by Brookfield. That plan also calls for investments from hedge fund Pershing Square Capital Management and investment manager Fairholme Capital Management.
Fairholme said it would not be part of a deal that included Simon, which had invited it to invest alongside.
Separately, some of General Growth's stakeholders, including Simon and unsecured creditors, filed objections in bankruptcy court to the Brookfield-backed plan. Thursday was the deadline for them to do so.
Simon said its improved offer removed uncertainty around a debt issuance and waived 'numerous costly fees' contained in Brookfield's plan.
The Brookfield-led group would obtain warrants worth hundreds of millions of dollars for their investment, while Simon is not asking for any -- a key difference Simon highlighted. Brookfield has said it would not give up the warrants.
In a bid to address antitrust concerns arising from the largest U.S. mall owner's bid to take a minority stake in the second-largest, Simon said its offer had numerous safeguards.
Should its bid succeed, Simon said it would designate only two General Growth directors and they would not be affiliated with it, confirming an earlier Reuters report.
Former Ernst & Young Partner Dale Anne Reiss and Wharton Real Estate Professor Peter Linneman would be its nominees.
General Growth will remain a separate company and all leasing decisions will be made at the property or operating company level and Simon will not try to influence them.
Simon said it would also agree to ownership limits. Under its offer, it would backstop $3.8 billion of capital in addition to its own commitment to invest $2.5 billion in General Growth.
It said it would agree to a cap on its voting rights at 20 percent and it would dispose of any interest in General Growth in excess of 45 percent that it ends up with due to its backstop commitment.
Simon already has commitments for $2.1 billion from a group of investors: Paulson & Co, ING Clarion Real Estate Securities, Oak Hill Advisors, Deutsche Bank AG's RREEF and hedge fund Taconic Capital Advisors.
'It is not Simon's intent to gain control of GGP pursuant to the backstop obligations,' it said in the letter.
Simon, however, is still interested in buying all of General Growth, sources previously told Reuters.
Simon would also backstop a $1.5 billion credit facility necessary for General Growth to close and emerge from bankruptcy. The move, it said, eliminates 'a great risk and uncertainty inherent' in the Brookfield-led proposal.
General Growth's unsecured creditors would get paid default or compound interest for their claims under the Simon plan.
As in the Brookfield-led plan, Simon's offer would create a new entity, General Growth Opportunities (GGO), to house certain General Growth assets.
Simon said it would waive a $12.5 million fee that would be levied by Brookfield, Pershing and Fairholme for their commitment to backstop a possible rights offering for GGO.
General Growth's shares closed down 3 cents at $15.39, while Simon stock was up $1.40 at $88.39, both on the New York Stock Exchange.
(Reporting by Paritosh Bansal and Ilaina Jonas; editing by Tim Dobbyn, Matthew Lewis and Andre Grenon)
(For more M&A news and our DealZone blog, go to http://www.reuters.com/deals) Keywords: GENERALGROWTH SIMON/ (paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, April 22 (Reuters) - Simon Property Group Inc said on Thursday it improved its offer to help fund rival General Growth Properties Inc's exit from bankruptcy, as it moved to elbow a competing bid by Brookfield Asset Management Inc out of the way.
The revised offer, which was sent to General Growth in a letter late on Wednesday, came as Simon prepared to make a pitch before General Growth's board on Thursday to persuade them to choose its offer over a plan backed by Brookfield. That plan also calls for investments from hedge fund Pershing Square Capital Management and investment manager Fairholme Capital Management.
Fairholme said it would not be part of a deal that included Simon, which had invited it to invest alongside.
Separately, some of General Growth's stakeholders, including Simon and unsecured creditors, filed objections in bankruptcy court to the Brookfield-backed plan. Thursday was the deadline for them to do so.
Simon said its improved offer removed uncertainty around a debt issuance and waived 'numerous costly fees' contained in Brookfield's plan.
The Brookfield-led group would obtain warrants worth hundreds of millions of dollars for their investment, while Simon is not asking for any -- a key difference Simon highlighted. Brookfield has said it would not give up the warrants.
In a bid to address antitrust concerns arising from the largest U.S. mall owner's bid to take a minority stake in the second-largest, Simon said its offer had numerous safeguards.
Should its bid succeed, Simon said it would designate only two General Growth directors and they would not be affiliated with it, confirming an earlier Reuters report.
Former Ernst & Young Partner Dale Anne Reiss and Wharton Real Estate Professor Peter Linneman would be its nominees.
General Growth will remain a separate company and all leasing decisions will be made at the property or operating company level and Simon will not try to influence them.
Simon said it would also agree to ownership limits. Under its offer, it would backstop $3.8 billion of capital in addition to its own commitment to invest $2.5 billion in General Growth.
It said it would agree to a cap on its voting rights at 20 percent and it would dispose of any interest in General Growth in excess of 45 percent that it ends up with due to its backstop commitment.
Simon already has commitments for $2.1 billion from a group of investors: Paulson & Co, ING Clarion Real Estate Securities, Oak Hill Advisors, Deutsche Bank AG's RREEF and hedge fund Taconic Capital Advisors.
'It is not Simon's intent to gain control of GGP pursuant to the backstop obligations,' it said in the letter.
Simon, however, is still interested in buying all of General Growth, sources previously told Reuters.
Simon would also backstop a $1.5 billion credit facility necessary for General Growth to close and emerge from bankruptcy. The move, it said, eliminates 'a great risk and uncertainty inherent' in the Brookfield-led proposal.
General Growth's unsecured creditors would get paid default or compound interest for their claims under the Simon plan.
As in the Brookfield-led plan, Simon's offer would create a new entity, General Growth Opportunities (GGO), to house certain General Growth assets.
Simon said it would waive a $12.5 million fee that would be levied by Brookfield, Pershing and Fairholme for their commitment to backstop a possible rights offering for GGO.
General Growth's shares closed down 3 cents at $15.39, while Simon stock was up $1.40 at $88.39, both on the New York Stock Exchange.
(Reporting by Paritosh Bansal and Ilaina Jonas; editing by Tim Dobbyn, Matthew Lewis and Andre Grenon)
(For more M&A news and our DealZone blog, go to http://www.reuters.com/deals) Keywords: GENERALGROWTH SIMON/ (paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.