General Growth offered new loan from Barclays

By Dow Jones Newswires
Posted July 9, 2010 at 11:38 a.m.

General Growth Properties Inc. is seeking court approval to replace its $400 million bankruptcy loan with a new financing package, which the shopping-mall operator said will allow it to save several million dollars in interest payments each month.

In court papers filed Thursday, General Growth said it has struck a deal with Barclays Bank PLC to take out a $400 million bankruptcy loan to replace a similar loan from a group of lenders led by Farallon Capital Management LLC.

The new loan, which General Growth said it aims to use to pay off all amounts owing under the old loan and for general working capital purposes, contains similar terms as the previous loan, except for a few “advantageous” revisions.

One such improvement is an interest-rate reduction of 8%, which General Growth said will save it $2.7 million each month. Other changes include loosening certain reporting requirements and easing certain investing restrictions.

The loan is slated to come due the earliest on May 16, 2011, the date that a Chapter 11 plan of reorganization takes effect or if General Growth defaults on the loan. The loan terms further give General Growth the option to use common stock to pay all or a portion of its borrowings and interest on the date its Chapter 11 plan takes effect.

Upon the closing of the loan, General Growth said it expects Barclays to assign the loan to Brookfield Asset Management Inc. or an affiliate. The ultimate source of the financing will be the $970.5 million that a Brookfield affiliate placed in escrow in connection with a bid to put up $6.5 billion to fund General Growth’s exit from bankruptcy.

The U.S. Bankruptcy Court in Manhattan will consider approving the financing at a July 22 hearing.

General Growth, which owns or manages more than 200 U.S. shopping malls, filed for bankruptcy protection in April 2009. The Chicago company said it expects to file its Chapter 11 plan Friday.

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