General Growth buys $633 million in warrants

General Growth Properties buys back all stock warrants held by Blackstone, Fairholme

Associated Press

CHICAGO (AP) -- Mall operator General Growth Properties Inc. said Monday that it has bought $633 million in warrants for its shares from two of the major investors that helped pull the company out of bankruptcy in 2010.

The Chicago-based real estate investment trust acquired the warrants from The Blackstone Group and Fairholme Funds Inc.

The warrants, which were scheduled to expire in November 2017, were exercisable into roughly 52 million common shares at a weighted average price of about $9.37 per share. That represents a discount of more than twofold to General Growth's closing price of $19.53 on Monday.

As a result of the transaction, which General Growth plans to fund with cash, Blackstone and Fairholme no longer hold any warrants to acquire the mall operator's shares.

The move leaves a third major investor, Brookfield Asset Management Inc., as the sole holder of General Growth's remaining warrants. Those warrants currently translate into roughly 83 million shares at an average exercise price of about $9.53 per share, the company said.

Earlier this month, Pershing Square Capital Management LP disclosed plans to sell $271.9 million in warrants for General Growth to Brookfield.

But the independent members of General Growth's board of directors decided not to buy those warrants, the company said.

General Growth has a portfolio of 126 regional malls in the U.S. and 18 malls in Brazil.

The company filed the largest real-estate bankruptcy case in U.S. history in 2009 under the burden of nearly $28 billion in debt. It exited bankruptcy with the aid of $6.8 billion in equity commitments from an investor group led by Brookfield.

Shares of General Growth ended regular trading down 15 cents at $19.53. The stock added 42 cents, or 2.2 percent, to $19.95 in extended trading following news of the warrants purchase.

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