General Growth Properties Inc (NYSE:GGP), the second largest owner of shopping mall in the United States announced that it bought warrants from The Blackstone Group L.P. (NYSE:BX) and Bruce Berkowitz's Fairholme Funds Inc. for $633 million.
The Chicago-based real estate investment company said it will use its available cash resources to pay for the transaction. General Growth Properties Inc (NYSE:GGP) said: “The warrants were exercisable into approximately 52 million common shares of the company at a weighted average exercise price of approximately $9.37 per share.”
According to the company, The Blackstone Group L.P. (NYSE:BX) and Fairholme no longer have any warrants in its possession to acquire common shares in the company.
General Growth Properties also said in its statement that the independent members of the board of directors of the company decided not to purchase the warrants held by Brookfield Asset Management Inc.(NYSE:BAM) (TSE:BAM.A).
Brookfield Asset Management Inc.(NYSE:BAM) (TSE:BAM.A) recently acquired 18.4 million warrants from Pershing Square Capital Management, the hedge fund managed by Bill Ackman for $271.9. Brookfield Management is the largest shareholder of General Growth Properties with a 42 percent stake in the company, and the only holder of the company’s warrants for approximately 83 million common shares at an average exercise price of $9.53 per share. Brookfield offered the warrants to General Growth to buy it with the same price.
General Growth Properties Inc (NYSE:GGP) filed for a chapter 11 bankruptcy protection in 2009 after failing to reach an agreement with its creditors. At that time, the company had $29.6 billion in assets and $27.3 billion in debts. Brookfield, Blackstone, and Fairholme, Pershing agreed to provide equity capital to help the company exit from bankruptcy. The private equity firms were granted warrants as part of their agreement with General Growth.
The company emerged from bankruptcy in November 2010 after receiving $6.8 billion in new equity capital and restructuring approximately $15 billion debt. General Growth started to offer135 million shares worth $2.35 billion. Some of the proceeds from selling its shares were used to repurchase the warrants held by the private equity firms.
General Growth Properties Inc (NYSE:GGP) currently owns 126 regional malls in the United States and 18 malls in Brazil. The company's stock traded around $19.72 a share on Tuesday.