Simon Property Reportedly To Sweeten Bid For General Growth - Update

(RTTNews) - Mall operator Simon Property Group, Inc. (SPG: News ) is expected to sweeten its $10 billion bid for bankrupt rival General Growth Properties, Inc. (GGP: News ) by the end of this week or early next week in order to top other rival offers or plans, according to reports Tuesday. Simon Growth revealed in a letter Monday that it would offer a new proposal in the next few days.

Earlier, Canadian property owner Brookfield Asset Management Inc. (BAM: News ) as well as Fairholme Capital Management, LLC, and Pershing Square Capital Management jointly proposed recapitalization plans for General Growth Properties or GGP.

Meanwhile, the Bankruptcy Court has approved an extension of the exclusivity period during which GGP has the right to file a plan of reorganization through July 15, 2010, and an extension of the period to solicit acceptances of a plan of reorganization through September 15, 2010. During the exclusivity period, no other party is permitted to file a competing plan of reorganization.

Simon Growth's new proposal is also reportedly expected to allay concerns about antitrust issues and financing. Meanwhile, Brookfield agreed to invest $2.63 billion and arrange a $1.5 billion loan, while two of GGP's largest investors, Fairholme Capital Management and Pershing Square Capital Management, have together proposed to invest an additional $3.93 billion, in a plan whereby GGP would be split in to two, one a healthy mall operator and the other a containing all the other troubled assets.

Earlier, GGP has reportedly been negotiating with Brookfield for funding its emergence from bankruptcy, which recently purchased $1 billion of GGP's debt in a move that suggests that it is jockeying for control.

Indianapolis, Indiana-based Simon Property had in mid-February offered to acquire GGP in a fully financed transaction valued at about $10 billion. The offer included about $9 billion in cash, with $7 billion for GGP's unsecured creditors. GGP rejected the offer as it was deemed not large enough to prompt it to drop its bankruptcy restructuring.

Currently, GGP's restructuring plan, along with its investors, is valued at a minimum of $15 per share, while Simon Property's $10 billion offer is valued at $9 per share. However, Simon Property is already scouting for potential partners, and was reportedly in talks with Blackstone Group L.P.(BX) and other sovereign wealth funds in case it would have to sweeten the offer.

Simon Property had earlier proposed to finance the $10 billion deal through cash on hand and through equity co-investments in the acquisition by strategic institutional investors, with the balance coming from its existing credit facilities.

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