GGP late yesterday issued a press release disclosing it was launching a consent solicitation of its subsidiary The Rouse Company's $400 million 3.625% notes due this Sunday and $200 million 8% notes due April 30 which the company can not afford to repay, and is hoping to obtain a forbearance through December 31, 2009. The solicitation which expires on March 16 at 5 pm, has already seen the consents of 41% of the holders, also meaning that 59% have not consented. Additionally, the company is seeking a forbearance from holders of its 7.2% notes due 2012, 5.375% notes due 2013, and 6.75% notes due 2013 who, through the end of the forbearance period would receive PIK interest and a nominal quarterly 62.5bps fee. In order for the consent to pass successfully, GGP needs the consent of 90% of the 2009 bondholders and 75% of the others.
Assuming this forbearance passes, GGP still faces an uphill climb away from bankruptcy court. The Company is also currently working with secured lenders of a $1.99 billion term loan and a $590 million revolving credit facility to extend the current forbearance which expires on March 15 through December 31 on comparable terms to the list above.
And assuming this forbearance also passes, GGP is lastly working with convertible and trust proffered holders: GGP has another $1.18 billion that is past due and $4.09 billion that could be accelerated immediately.
So assuming there is a glitch in the matrix and even one of these forbearance attempts fails what happens? The company puts it best:
If the Company is unable to obtain forbearances from these creditor groups, or if substantial amounts of the Company’s debt are accelerated as a result of a default, the Company may be forced to seek protection under the Bankruptcy Code.
Of course bondholders will at some point realize that postponing the inevitable here may ultimately just be dramatically lowering recoveries on their holdings. As such we will focus on the newsflow from GGP on the 15th... It is sure to be have quite significant impacts for both the company, CMBS, and the commercial REIT space.