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Monday, March 16, 2009
GGP Defaults On Yet Another Issue
Just end the charade already... Holders of GGP's 3.625% bonds today did not, much to their lack of surprise, end up with a mysterious $395 million wire transfer in their accounts. They now have the option of forcing the company to file for bankruptcy (yes, yes, 30 day grace period and all). Meanwhile, the forbearance deadline, which passed at 5 PM today, and whose results are being tabulated as I type should make for some fairly interesting news either tonight or at worst tomorrow morning. And although I disagree with Ackman that there is necessarily incremental equity value in the organization upon a filing, it is about time the company did the right thing and pulled the plug, allowing bondholders to determine its fate from this moment on.
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3 comments:
The "right thing" is may be for short real estate and holders of CDS on GGP. but I doubt it is the right thing for GGP stake holders.
why do not the bondholders pull the plug themselves. any creditor can file for involuntary bankruptcy.
so I am not sure that it is the "right thing" to do for any of the stakeholders.
banks for sure do not want that to happen.
btw do not have any economic interest in GGP
Sami
banks want to preserve capital at all costs, not see it continue bleeding in line with management's existing strategy. it shall be seen today or tomorrow at the latest what bondholders end up doing. and lastly if ackman is right, GGP shorts will be burned if the company files... so the only thing happening would be existing management handing keys over to bondholders, while equity value may or may not be higher at the end of the day.
BK will be trigger for CDS.
I agree with you I think there is no scenario that equity holders will be whole. I think liquidation is likely
lenders will cherry pick properties based on their seniority and the equity holders will end of next to nothing if any thing.
And how Ackman will be on the table to ensure his stake is protected it does not matter if he owns 1% or 90% it is the creditors call now.
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