General Growth still in debt talks

Associated Press

Published Friday, Dec. 12, 2008 | 8:28 a.m.

Updated Friday, Dec. 12, 2008 | 2:42 p.m.

Troubled mall owner General Growth Properties, trying to stave off bankruptcy, said it is still trying to negotiate an extension on $900 million in debt that is due to be repaid Friday, but warned there can be "no assurance" it will get a reprieve.

Investors, however, appeared optimistic that bankruptcy would be avoided as shares rose 37 cents, or 25 percent, to $1.81 in morning trading.

The mortgages cover two Las Vegas malls, Fashion Show and Palazzo. Earlier this month, Chicago-based General Growth received a two-week extension on the loans.

General Growth Properties Inc. also said in a prepared statement issued that it refinanced a separate $896 million worth of loans, retiring a $58 million bond that matured Thursday and $814 million of debt scheduled to mature next year.

Chicago-based General Growth, the nation's second-largest shopping mall owner, has been hit hard by the credit crunch, as it piled up a staggering debt load during the real estate market's boom years. Analysts are unsure whether new managers, installed in late October, will be able to keep the company afloat as the recession drags on and U.S. retailers struggle. The company last month hired law firm Sidley Austin as an adviser.

General Growth has a stake in more than 200 shopping malls in 44 states.

In Las Vegas, General Growth owns regional malls Boulevard and Meadows; and Las Vegas Strip malls Fashion Show, Grand Çanal Shoppes and the Shoppes at the Palazzo. It's also developing a regional mall in Summerlin, though construction on that project has slowed recently.

General Growth has been marketing for sale its three malls on the Strip.

It also owns The Howard Hughes Corporation, developer of the 22,500-acre Summerlin planned community.

Shares of General Growth have lost 95 percent of their value over the past six months.

Last month, the company reported disappointing third-quarter results and cut its year-end forecast, weeks after the mall owner's board removed its chief executive, president and chief financial officer.

Their ouster came after the company disclosed that former CEO John Bucksbaum's family trust provided $90 million in personal loans to cover margin debt for the former chief financial officer and president.