Fairholme Capital Management and Pershing Square, two key investors in General Growth Properties Inc., are teaming up to invest another $3.93-billion (U.S.) in the mall operator to help it emerge from bankruptcy, according to a person familiar with the matter.
The transaction is part of a plan involving Brookfield Asset Management that would allow General Growth to remain independent instead of selling itself to its largest competitor, Simon Property Group Inc. The involvement of Fairholme, General Growth's biggest creditor, and Pershing Square, General Growth's biggest shareholder, removes key elements in doubt when Brookfield put forth its plan late last month to split General Growth in two, the person said.
Officials at General Growth, Fairholme, Brookfield, and Pershing Square were either not immediately available for comment or declined to comment.
Brookfield's original plan called for General Growth to sell about $1-billion of assets and about $3.3-billion of new equity. A General Growth spinoff, called General Growth Opportunities, was also supposed to sell $125-million of equity to outside investors.
Fairholme and Pershing Square have agreed to invest that $125-million in General Growth Opportunities equity.
They have also agreed to buy up to $3.8-billion of shares from General Growth itself, the person said.
If other investors are willing to buy General Growth shares at more than $10 apiece, Fairholme and Pershing Square could buy as little as $1.9-billion of shares.
The funds from Fairholme and Pershing Square, combined with funds from Brookfield and a $1.5-billion loan secured by General Growth, will leave the company with about $7.8-billion.