General Growth fails to get forbearance from Rouse noteholders; talks with holders, lenders continue

By Angela McDaniels

Tacoma, Wash., March 30 - General Growth Properties, Inc. said it did not receive the needed amount of consents from the holders of Rouse Co. LP's unsecured notes during a solicitation of forbearance that ended March 27.

Discussions with the ad hoc committee of noteholders and General Growth's syndicate of lenders under its senior credit agreement remain ongoing, according to a company news release.

"Although we did not achieve the minimum acceptance levels for each series of notes, we did receive a significant number of consents from the holders of all five series," chief executive officer Adam Metz said in the release.

"We are grateful for the support we received from the holders of the TRCLP notes and we are working with the representatives of the TRCLP notes and the 2006 senior credit agreement lenders to address the credit crisis facing the company."

Five series of notes with $2.25 billion principal amount outstanding were covered by the solicitation, including Rouse's 3 5/8% notes due March 15, 2009, 8% notes due April 30, 2009, 7.2% notes due 2012, 5 3/8% notes due 2013 and 6¾% notes due 2013.

The company had requested forbearance from remedies for payment and other defaults of the notes through Dec. 31, 2009 and that holders forbear from exercising remedies for some other potential defaults and cross-defaults.

In addition, holders of Rouse's 3 5/8% notes and 8% notes were asked to forbear from exercising remedies due to Rouse's failure to repay the debt at maturity, and holders of all five series of notes were asked to forbear from exercising remedies due to Rouse's failure to pay cash interest during the forbearance period.

For the forbearance to be effective, General Growth needed 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 return for consents, General Growth offered to pay a quarterly consent fee of $0.625 in cash per $1,000 principal amount.

When the consent solicitation began on March 9, General Growth also announced that it is working with the lenders on the senior credit agreement, which includes a $590 million revolving credit facility and a $1.99 billion term loan, to extend the forbearance agreement currently in place through Dec. 31, 2009. Obtaining this forbearance was 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.

General Growth is a Chicago-based real estate investment trust that owns regional shopping malls, master planned community developments and commercial office buildings.

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