General Growth Properties Inc.'s reorganization plan was approved Thursday, paving the way for the operator of the Glendale Galleria and other malls to exit bankruptcy a year and a half after it was brought to its knees by billions in debt it could not refinance.
General Growth said it expected to emerge from bankruptcy around Nov. 8. It then would turn its attention to a $2.25 billion stock sale to raise capital.
Shareholders often lose everything in a bankruptcy. Under the plan confirmed by U.S. Bankruptcy Judge Allan Gropper in New York, all bondholders will be repaid and the 3,000 shareholders will get more than $5.2 billion of equity.
"This is an extraordinary case," Chief Executive Adam Metz said after the hearing.
Chicago-based General Growth, the No. 2 mall owner after Simon Property Group Inc, was the only company to be reinstated on the New York Stock Exchange during bankruptcy, Gropper said.
General Growth will exit bankruptcy as two publicly traded companies.
The main company will retain the name General Growth Properties and about 185 properties, most of them malls and some mixed-use properties.
The other company, Howard Hughes Corp, will consist of its master planned community business, land and shopping centers in development and other non-income-producing properties. It will trade under the symbol "HHC" on the New York Stock Exchange.
The company was solvent when it filed for bankruptcy protection April 16, 2009. But it was unable to refinance large mortgage loans and corporate debt during the credit crisis. It was facing more $11.8 billion in maturing debt through 2012.
Under the reorganization plan, investors led by Brookfield Asset Management Inc. and hedge funds Fairholme Funds Inc. and Pershing Square Capital Management will put up about $7 billion of new capital to fund the new company.
Teacher Retirement System of Texas is investing $500 million. Blackstone Real Estate Advisors has agreed to invest $500 million in exchange for 7.6% of both companies, which will be derived from stakes held by Brookfield, Fairholme and Pershing.