Simon Property Group announces improved finance plan for General Growth Properties

Simon says it improved offer for General Growth

INDIANAPOLIS — Mall owner Simon Property Group Inc. said Thursday it has improved an offer it made earlier this month to help finance the bankruptcy exit of its biggest rival, General Growth Properties.

The Indianapolis company will backstop a $1.5 billion credit facility General Growth needs to emerge from bankruptcy, waive a $12.5 million fee and limit its governance rights.

Simon plans to buy 250 million shares of General Growth common stock for $10 a share, or $2.5 billion in total. It also will backstop an additional $3.8 billion in shares to be issued as part of the reorganization.

Simon said it also has a commitment from a group of companies including Paulson & Co., Taconic Capital and Oak Hill Advisors to invest at least $2.1 billion in equity.

General Growth has proposed a plan calling for Brookfield Asset Management, Fairholme Capital Management and Pershing Square Capital Management to put up more than $6.5 billion combined to finance its bankruptcy exit.

But Simon said in a statement that its offer provides “significantly higher value and substantially greater certainty” to General Growth and its stakeholders than the Brookfield proposal.

In a letter Thursday to General Growth CEO Adam Metz, Fairholme reiterated that it is not willing to invest in General Growth if equity ownership is concentrated in the hands of Simon, “passive or not.”

“We simply find the value proposition for the public float unsupportable assuming successful execution of anything like the (Simon) proposal,” said the letter from Bruce R. Berkowitz, Fairholme founder and managing member. “We continue to support a stand-alone (General Growth) and hope for a long-term relationship.”

General Growth declined comment Thursday.

Shares of Simon rose $1.40, or 1.6 percent, to close at $88.39 Thursday, while General Growth Properties dipped 3 cents to $15.39.