From Crain’s
General Growth plunges on bankruptcy warning
By Alby Gallun, ChicagoBusiness.com
Published: November 11, 2008 – 2:55 pm
Shares in General Growth Properties Inc. plunged Tuesday morning after the shopping mall owner raised the possibility that it may have to file for bankruptcy protection as it tries to refinance more than $4 billion in debt that comes due by the end of 2009.
In afternoon trading, the stock was down 71.5% at 39 cents.
“Even without a bankruptcy filing, equity holders remain at risk from other potential capital raising alternatives with a capital infusion or a debt-for-equity swap significantly diluting their interest,” Citigroup Global Markets Inc. analysts wrote in a research report. “There is no quick fix in the current capital constrained environment and the shares will likely remain extremely volatile.”
The company’s woes could affect two important sites in New York City. General Growth owns the South Street Seaport and has been working with the city to have the site rezoned so it can be redeveloped to include a hotel and apartments. And last month, a joint venture of seven organizations including General Growth was tapped to develop a $700 million, 1.7-million-square-foot mixed-use project on East 125th St.
Seth Pinksy, president of New York City’s Economic Development Corp., said the South Street Seaport rezoning plan continues to move through the process. He added that the city is “committed to its partnership with General Growth” but that other developers would find that site attractive.
Mr. Pinsky also said that joint venture that is slated to build on 125th St. must meet certain milestones to maintain its agreement with the city. At this point, he said all of those obligations are being satisfied.
Theresa Agovino contributed.
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