General Growth extends solicitation of forbearance for Rouse unsecured notes

By Angela McDaniels

Tacoma, Wash., March 23 - General Growth Properties, Inc. has extended the consent solicitation requesting forbearance from holders of notes issued by its Rouse Co. LP subsidiary to 5 p.m. ET on March 27 from March 16, according to a company news release.

The Chicago-based real estate investment trust is requesting forbearance from remedies for payment and other defaults of the notes through Dec. 31, 2009. Covered by the solicitation are five series of notes with $2.25 billion principal amount outstanding.

As of 5 p.m. ET on March 20, consents had been received for $165.80 million, or 42%, of Rouse's 3 5/8% notes due March 15, 2009, for $134.78 million, or 67.4%, of its 8% notes due April 30, 2009, for $340.06 million, or 85%, of its 7.2% notes due 2012, for $310.93 million, or 69.1%, of its 5.373% notes due 2013 and for $625.41 million, or 79.5%, of its 6¾% notes due 2013.

For the forbearance to be effective, General Growth needs consents from holders of 90% of the 3 5/8% notes and 8% notes and 75% of the 7.2% notes, 5 3/8% notes and 6¾% notes.

"In light of the fact that during the initial extension of the consent solicitation, we received an increased level of consents from bondholders in all series and due to difficulties that we understand some holders experienced in obtaining the consent solicitation materials, we have decided to extend the solicitation for an additional period," chief executive officer Adam Metz said in the release.

The consent solicitation began March 9. General Growth is asking holders of Rouse's 3 5/8% notes and 8% notes to forbear from exercising remedies due to Rouse's failure to repay the debt at maturity.

Holders of all five series of notes are being asked to forbear from exercising remedies due to Rouse's failure to pay cash interest during the forbearance period. Interest will continue to accrue and will be added to the principal amount of the notes.

General Growth is also asking holders to forbear from exercising remedies for some other potential defaults and cross-defaults.

In return for consents, General Growth will pay a quarterly consent fee of $0.625 in cash per $1,000 principal amount.

Rouse will also agree to various restrictions, including limitations on some fundamental changes, incurrence of debt and liens, asset sales and issuances of capital stock by subsidiaries, dividends and other restricted payments and investments, transactions with affiliates and limitations on certain kinds of capital expenditures.

Rouse will also provide the ad hoc committee of noteholders with information, including cash flow budgets, business plans and terms sheets for a comprehensive restructuring plan that will include out-of-court and in-court alternatives. Rouse will also work with the ad hoc committee's advisers to begin implementation of such a restructuring plan.

Termination events will include bankruptcy events relating to Rouse, breaches by Rouse of its obligations under the forbearance agreement, some cross-defaults on other debt of Rouse and General Growth and failure to reach agreement on a restructuring plan by the end of July.

Holders who do not consent will not be bound by the forbearance.

The company said it does not plan to make any payments of principal or interest on the Rouse notes during the forbearance period.

When the consent solicitation began, General Growth also announced that it is working with the lenders on its 2006 credit agreement, which includes a $590 million revolver and a $1.99 billion term loan, to extend the forbearance agreement currently in place through Dec. 31, 2009. Obtaining this forbearance is a condition to the agreement for the notes.

In addition, General Growth expected to start talks with holders of its $1.55 billion of 3.98% exchangeable senior notes and GGP Capital Trust I's $200 million of trust preferred securities on similar forbearances.

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