GGP Reportedly Rushes Payday
Retail real estate investment trust General Growth Properties opted last week to pay its employees ahead of schedule, according to a well-placed banker, stirring up speculation that GGP may be acting in anticipation of a bankruptcy filing. The news combined with today’s announcement of GGP’s failed bondholder consent solicitation is sending a clear signal that a bankruptcy is possible, added a trader.
The REIT itself is neither confirming or denying the report. "[GGP] has decided not to respond to speculation or rumor about internal personnel matters," a company spokesman said. The REIT allegedly issued paychecks on Thursday, March 26, ahead of today’s scheduled date.
The REIT announced earlier today that it had failed to garner enough support to strike a forbearance agreement on $2.3 billion in bonds. The REIT received pushback from holders of bonds maturing this year. It was looking to delay principal and interest payments until year-end.
GGP said it is "continuing discussions" with a group of bondholders and a separate group of lenders backing its credit agreement. The syndicate behind the $2.6 billion credit agreement is led by Bank of America, and also includes Commerzbank, Credit Suisse, EuroHypo, Lehman Brothers and Wachovia.